practices hereinafter set forth. their address is the same ......tomers may place their toothbrush...

374 FEDERAL TRADE COMMISSION DECISIONS

Complaint 76 F. T.

IN THE MATTER OF

AMERICAN DE:\TAL LABORATORIES , INC. , ET AL.

CONSENT ORDER , ETC. , IN REGARD TO THE ALLEGED VIOLATION OF THEFEDERAL TRADE COMMISSION ACT

Docket C-1588. Complaint , Sept. 10, 1969-Decision, Sept. 10, 1969

Consent order requiring Affton , ::10., distributors of toothbrush vending ma-chines and supplies to cease misrepresenting that they will furnish prof-

itable locations to purchasers of their vending machines, that they willtrain such purchasers, that no soliciting '\vill be required, that they areconnected with the du Pont Company or any motel chain, and to ceaseusing the word "Laboratories" in their trade name which misrepresentsthat they operate a laboratory.

COMPLAINT

Pursuant to the provisions of the Federal Trade CommissionAct, and by virtue of the authority vested in it by said Act, theFederal Trade Commission , having reason to believe that Ameri-can Dental Laboratories , Inc. , a corporation , and Ed Zenthoeferand Ray Kowalskey, individual1y and as offcers of said corpora-tion , hel'einafter referred to as reSlJondents, have violated the

provisions of said Act , and it appearing to the Commission that aproceeding by it in respect thereof would be in the public inter-est , hereby issues its complaint stating its charges in that respectas fol1ows:

PARAGRAPH 1. Respondent American Dental Laboratories , Inc.is a corporation organized , existing and doing business under andby virtue of the laws of the State of Missouri, with its principal

offce and place of business located at 9722 Reavis Park Drive , inthe city of Affton , State of Missouri.

Respondents Ed Zenthoefer and Ray Kowalskey are offcers ofsaid corporation . They formulate , direct and control the acts andpractices of the corporate respondent, including the acts andpractices hereinafter set forth. Their address is the same as thatof the corporate respondent.

PAR. 2. Respondents are now , and for some time last past havebeen , engaged in the advertising, offering for sale , sale and distri-bution of toothbrush vending machines , disposable toothbrushesand supplies used and dispensed thereby to purchasers for instal-lation in commercial establishments such as offce buildings, ho-tels , motels , and restaurants for resale to the public.

AMERICAN DENTAL LABORATORIES, INC., ET AL. 375

374 Complaint

PAR. 3. In the course and conduct of their business as afore-said , respondents now cause, and for some time last past havecaused, their products , when sold , to be transported from theirplace of business located in the State of Missouri, or from theplaces of business of their suppliers , to purchasers thereof locatedin various other States of the United States and maintain , and atall times mentioned herein have maintained, a substantial course

of trade in said products in commerce , as "commerce" is definedin the Federal Trade Commission Act.

PAR. 4. In the courSe and conduct of their aforesaid business,and for the purpose of inducing the purchase of their products

the respondents have made , and are now making, numerous state-ments and representations in advertisements inserted in newspa-pers and promotional material with respect to earnings , and busi-ness opportunities that can be derived by the purchase ofrespondents ' products.

Typical and mustrative of said statements and representationsbut not all inclusive thereof, are the foIlowing:

applications now being accepted forPROFITABLEDUPONT NEW DUPONT

FRANCHISE OPPORTUNITYMEN or WO IEN

A revolutionary hew product developed by DuPont for the mass market is

being sold exclusively through automatic merchandising units. This may beexactly the opportunity you ve been looking for to provide a profitable , sc-

cure future for your family while you build independence.

* No selling-no experience* Dignified work-full or part time'" We furnish locations!* Invest as little as $998!

,; Investment quickly ReturnedvVrite today for complete details. Of course there is no obligation, but wefeel obligated to assign franchises to the first qualified applicants. So don

delay. Write Box D476 Daily Oklahoman for personal interview. Give tele-phone number in reply.

PART TDm-FL"LL TIMEIf you have two hours or more a week you can service coin-operated dispensers offering the new DU POXT DENTIFRICE COATED NYLONBRISTLE TOOTHBRUSHES. (Just wet and brush *** no toothpastenecessary). Going into motels , offce buildings , restaurants , etc. ))0 selling-no competition. Only product of this type on market. Vle assist in setting upcomplete operation. Opportunity to earn in excess of $15 000 yearly. Minimum investment $600. Write Box 25 , Tribune- Star. Give telephone numberin reply.


Complaint 76 F.

PART TIME BUSINESSIf you have 8 to 10 hours a week available you can own a business of your

own. Service DU PONT NYLON DISPOSABLE TOOTHBRUSH DIS-PENSERS on location. competition. Only product of this type on the

market. Your profit 14if on every toothbrush unit you replace in dispensers.No selling necessary. We secure locations for you. 6 sales daily per machineon a 20-machine route possible to earn $100.80 a week. $500 to $1 000 inven-tory investment required. Write M. Finn. DU PONT-Executive House4466 W. Pine St. , St. Louis , ?vissouri 63108.

PAR. 5. By and through the use of the above quoted statementsand representations , and others of similar import and meaningbut not expressly set out herein, separately and in connection

with the oral statements and representations of their salesmenand representatives, the respondents have represented , and arenow representing, directly or by implication that:

1. Respondents furnish to purchasers of their vending ma-

chines satisfactory or profitable sales producing locations for theplacing of said vending machines , such as leading restaurants , ho-tels, motels, cocktail lounges , offce buildings and bus terminals.

2. Purchasers investing money in said vending machines anddisposable toothbrushes may reasonably expect to earn net profitsof approximately $15 000 per year and that said investment mayreasonably be expected to be returned out of net profits in one

year or less.3. The purchasers of said machines wil1 be trained by the re-

spondents as to the operation of the machines and the methods tobe used in servicing them.

4. No selling or soliciting will be required.5. The machines purchased by respondents ' customers wil1 av-

erage seven vends each per day.6. Respondents ' salesmen are representatives of the du Pont

Company.7. Respondents have agreements with Holiday Inns of America

and other large motel and restaurant chains whereby these com-

panies wi1 accept respondents ' machines in any of their motels orrestaurants.

8. Respondents grant exclusive sales territories in which cus-tomers may place their toothbrush vending machines.

9. Respondents wil1 deliver their vending machines and sup-plies within 30 days after the customer signs the contract.

10. Respondents or any other organization are planning toplace national advertising relating to the vending machines or


374 Complaint

other supplies , or that respondents wil furnish other advertisingand promotional assistance.

PAR. 6. In truth and in fact:

1. Respondents do not obtain satisfactory or profitable salesproducing locations such as restaurants, hotels, motels , cocktaillounges , offce buildings and bus terminals for the placing of thevending machines purchased from them, but such locations asmay be secured by respondents are usually undesirable, unsuita-ble and un profitable.

2. Purchasers who have invested money in the purchase of saidvending machines and supplies do not earn profits approximating$15 000 per year and do not earn suffcient net profits for the re-turn of the investment in one year or Jess , but on the contrary, inmost instances , persons purchasing said vending machines andsupplies make little or no profit from the operation of the ma-chines.

3. Respondents do not train the purchasers of the vending ma-chines in the operation of the machines or the method to be usedin servicing the vending machines where instal1ed.

4. The purchasers of respondents ' machines are required to doselling and soliciting, since it is frequently necessary to place ma-chines in other locations because of the undesirable , unsuitableand unprofitable nature of the locations selected by the respond-ents or for other reasons.

5. Vending machines sold to purchasers by respondents do notaverage as many as seven vends per machine , per day, but on thecontrary, few , if any, of said vending machines soJd to purchas-ers by respondents averaged as much as one vend per day, pern1achine.

6. Since August 1967 neither respondents nor their representa-tives have had any agTeement or any other connection or relation-ship with the du Pont Company, who , prior to that time , sold torespondents the disposable toothbrush for said vending machines.

7. Respondents do not have an agreement with Holiday Inns ofAmerica , or any other motel or restaurant chain whereby individ-ual motels and restaurants wil permit respondents ' vending ma-chines to be installed on their premises.

8. Respondents do not grant exclusive sales territories to theircustomers but, in fact sell the machines to any person in any areawho has the required investment to pay for respondents ' prod-ucts.


Complaint 76 F.

9. Respondents do not deliver their machines to customerswithin 30 days of the time the contract is signed , but often takeup to six months or more before such delivery is accomplished.

10. Neither respondents nor any other company has placed oris planning to place any national advertising concerning respond-ents ' vending machines or products. Nor do respondents furnishany other advertising or promotional assistance.

PAR. 7. Through the use of the word "Laboratories" as a partof respondents ' trade name , respondents represent that they oper-ate a laboratory or are engaged in research in connection with

their business. In truth and in fact , respondents do not operate alaboratory and do. no research in connection with their business.Therefore , the aforesaid statement and representation is false,misleading and deceptive.

PAR. 8. In the course and conduct of their business, and at aU

times mentioned herein , respondents have been and now are insubstantial competition, in commerce, with corporations, firms

and individuals engagcd in the sale of vending machines of thesame general kind and nature as that sold by respondents.

PAR. 9. The use by respondents of the aforesaid false, mislead-ing and deceptive statements and representations and practiceshas had , and now has , the capacity and tendency to mislead mem-bers of the purchasing public into the erroneous and mistaken be-lief that said statements and representations were and are trueand into the purchase of substantia! quantities of respondentsproducts by reason of said erroneous and mistaken belief.

PAR. 10. The aforesaid acts and practices of respondents , as

herein al1eged , were and are all to the prejudice and injury of thepublic and of respondents ' competitors and constituted , and nowconstitute , unfair methods of competition in commerce and unfairand deceptive acts and practices in commerce in violation of Sec-tion 5 of the Federal Trade Commission Act.

DECISION AND ORDER

The Federal Trade Commission having initiated an investiga-tion of certain acts and practices of the respondents named in thecaption hereof , and the respondents having been furnished there-after with a copy of a draft of complaint which the Bureau ofDeceptive Practices proposed to present to the Commission for itsconsideration and which, if issued by the Commission, would


374 Decision and Order

charge respondents with violation of the Federal Trade Commis-sion Act; and

The respondents and counsel for the Commission having there-after executed an agreement containing a consent order, an ad-mission by the respondents of all the jurisdictional facts set forthin the aforesaid draft of complaint , a statement that the signingof said agTeement is for settlement purposes only and does notconstitute an admission by respondents that the law has been vio-

lated as alleged in such complaint, and waivers and other provi-sions as required by the Commission s Rules; and

The Commission having thereafter considered the matter andhaving determined that it had reason to believe that the respond-ents have violated the said Act, and that complaint should issuestating its charges in that respect , and having thereupon acceptedthe executed consent agreement and placed such agreement on thepublic record for a period of thirty (30) days , now in furtherconformity with the procedure prescribed in 9 2. 34 (b) of itsRules , the Commission hereby issues its complaint, makes the fol-lowing jurisdictionallindings , and enters the following order:

1. Respondent American Dental Laboratories, Inc. , is a corpo-ration organized , existing and doing business under and by virtueof the laws of the State of Missouri , with its offce and principalplace of business located at 9722 Reavis Park Drive, in the city ofAffton , State of Missouri.

Respondents Ed Zenthoefer and Ray Kowalskey are offcers ofsaid corporation and their principal offce and place of business islocated at the above stated address.

2. The Federal Trade Commission has jurisdiction of the sub-ject matter of this proceeding and of the respondents , and theproceeding is in the public interest.

ORDER

I t is o?-deTed That respondents American Dental Laboratories,Inc. , a corporation , and its offcers , and Ed Zenthoefer and RayKowalskey, individually and as offcers of said corporation , andrespondents' agents, representatives and employees, directly orthrough any corporate or other device , in connection with the ad-vertising, offering for sale , sale or distribution of vending ma-chines and vending machine supplies, or any other merchandise


Decision and Order 76 F.

in commerce, as "commerce" is defined in the Federal TradeCommission Act , do forthwith cease and desist from:

A. Representing, directly or by implication:1. That respondents will furnish satisfactory or prof-

itable sales producing locations or misrepresenting, inany manner , the sales potential or character of the loca-tions in which respondents place their vending machinesand products at the time of the purchase of the ma-

chines.2. That purchasers of respondents ' products wil earn

any stated amount of gross or net profits or other earn-ings.

3. The past earnings of respondents ' purchasers: Pro-vided, howeve,' It shall be a defense in any enforcementproceeding instituted hereunder to establish that thepast earnings represented are those of substantial num-ber of purchasers and accurately reflect the average

earnings of these purchasers under circumstances simi-

lar to those of the purchaser or prospective purchaser towhom the representation is made.

4. That the net profits from the operation of saidvending m(lGhines will be suffcient to return the invest-

ment of the purchaser within one year or misrepresent-ing any other period of time in which the net profitsfrom the operation of said vending machines wil be suf-ficient to return the investment of the purchaser.

5. That purchasers of respondents ' vending machineswill be trained by the respondents as to the operation ofthe machines or the methods to be used in servicing thelocations where insta1Jed.

6. That no sel1ng or soliciting wil be required.7. That respondents' vending machines wil average

as many as seven vends per day, per machine, or mis-

representing in any manner , respondents ' machines av-erage.

8. That respondents or their representatives are con-nected with the du Pont Company or otherwisemisrepresenting respondents ' relationship with du Pontor any other company or the source of their merchan-dise.



9. That respondents have an agreement with Holiday

Inns of America , or any other motel or restaurant chainto accept respondents ' vending machines , or otherwise

misrepresenting the class or type of locations available

to customers of respondents.

10. That respondents grant exclusive sales territoriesto their customers: Provided, ho'wei)er It shall be a de-

fense in any enforcement proceeding instituted hereun-der to establish that exclusive sales territories are infact granted by respondents.

11. That respondents ' machines or other merchandisewil be delivered within thirty (30) days after the con-

tract is signed , or misrepresenHng in any manner theamount of time that wil transpire between the time thecontract is signed and the time the merchandise is deliv-ered.

12. That respondents, or any other organization , areplanning to place national advertising respecting thevending machines or other merchandise respondents sel1or misrepresenting in any manner the promotional oradvertising assistance respondents will provide for theircustomers.

B. Using the word "Laboratories" as part of any businessname or representing in any other manner , directly or by im-plication, that a laboratory is operated by or for the saidbusiness, or that the said business differs in any mannerfrom its true nature.

It is further ordeTed That respondents deliver a copy of thisorder to cease and desist to all present and future salesmen orother persons engaged in the sale of respondents ' products orservices , and secure from each such salesman or other person asigned statement acknowledging receipt of said order.

It is further ordered That the rcspondent corporation shaJlforthwith distribute a copy of this order to each of its operatingdivisions.

It is further' ordered That the respondents herein shaJl , withinsixty (60) days after service upon them of this order, file withthe Commission a report, in writing, settng forth in detail themanner and form in which they have complied with this order.


Complaint 76 F.

IN THE MATTER OF

CURTISS-WRIGHT CORPORATION

ORDER , ETC. , IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERALTRADE COMMISSIO,, ACT

Docket 870,'. Complaint , Aug. 8, 1966-lJecision, Sept. , 1969

Order dismissing a complaint 'which charged a Wood-Ridge I., distributorof aircraft engine parts with monopolizing" the sale of its products andattempting to eliminate competit.ion in the overh::nl1 of its engines forthe reason that jet engines are replacing l'cciV1"ocating piston driven en-gines in both the civilian and military ma .'kets.

COMPLMNT

Pursuant to the provisions of the Federal Trade CommissionAct , and by virtue of the authority vested in it by said Act , theFederal Trade Commission , having reason to believe that Cur-tiss-Wright Corporation , sometimes hereinafter referred to as re-spondent or Curtiss-Wright, has violated the provisions of Sec-tion 5 of the Federal Trade Commission Act (15 U. C. Section

45), and it appearing to the Commission that a proceeding by itin respect thereto would be in the public interest, hereby issuesits complaint , stating its charges in this respect as follows:

PARAGRAPH 1. Respondent Curtiss-Wright is a corporation or-ganized , existing and doing business under and by virtue of thelaws of the State of Delaware with its offce and principal placeof business at 304 Valley Boulevard , Wood-Ridge , New Jersey.

PAR. 2. (a) Curtiss-Wright is engaged in the sale of variousproducts some of \vhich it produces and some of which are pro-duced for it by others. Respondent's stock is listed on and tradedover the New York Stock Exchange and its business is substan-tial with sales, including those of subsidiaries, in excess of

$200 000 000 for each of the years from 1960 to 1963 inclusive.(b) Included among the products sold and distributed by Cur-

tiss-Wright are aircraft engines and parts therefor which it sellsor has sold to the United States Government for use in militaryaircraft, and to others , including commercial airlines, both do-mestic and foreign. Parts for aircraft engines are also sold and

have been sold by respondent to parties with which it enters intoagreements whereunder such parties are designated as Ap-proved Overhaul Bases" for specified Curtiss-Wright engines , and

CURTISS-WRIGHT CORP, 383

382 Complaint

under the terms of which respondent agrees inter alin to distrib-

ute to such bases senice manuals and bu1letins and to se1l theretospare parts for use in the repair or overhaul of Curtiss-Wrightengines. In addition to entering into agreements whereby it ap-points others as "Approved Overhaul Bases" for its engines , Cur-tiss-Wright itself also engages and has engaged in the overhaulor repair of such engines for others who pay respondent for serv-ices it renders in this connection.

(c) Sales of aircraft engine parts together with payments torespondent for services it renders itself in connection with theoverhaul or repair of such engines aggregated more than half 'total do1lar sales for each of the years 1960 through 1963, Of thisportion of total sales however sales of engine parts representedthe great bulk thereof in each of such years , substantial1y exceed-ing $100 000 000 in leach of three of the four years.

PAR. 3. 1n the course and conduct of its business of se1ling anddistributing parts for Curtiss- Wright aircraft engines, respond-ent ships, has shipped or has caused such parts to be shipped

from its plant or plants in New Jersey or other States to pur-chasers of such parts with places of business in States other thanthose where shipment thereof originates 01' originated. Similarly,respondent after rendering such services as it performs in

connection with the repair or overhaul of Curtiss-Wright enginesfor others , ships, has shipped or has caused such engines to beshipped from its plant 01' plants in New Jersey, or other Stateswhere such services were rendered , to purchasers of such serviceswith places of business in States other than those where ship-

ment of such engines originated. Respondent thus is and hasbeen engaged in commerce as ((commerce" is defined in the Fed-eral Trade Commission Act.

PAR. 4. Respondent , in the course and conduct of se1ling' and dis-tributing parts for Curtiss-Wright engines and rendering servicein connection with the overhaul or repair of such engines in com-

merce , is and has been engaged in competition with others in thesale and distribution of parts fat such engines and in the rendi-tion of services in connection with the overhaul or repair thereofexcept to the extent that actual or potential competition has beeninjured , eliminated or prevented by the acts and practices herein-after a1leged.

PAR. 5. (a) Curtiss-Wright holds or owns , either directly or in-directly, patents or patent rights upon some of the aircraft en-gine parts it se1ls and has sold. As to many other engine parts,


Complaint 76 F.

respondent asserts or purports to assert proprietary rights stem-ming from contributions it claims to have made in the develop-ment or production of such parts.

(b) Many of the engine parts distributed by Curtiss-Wrightare produced for and sold to it by others. As to many, most of allof such parts so produced, respondent enters into agreements

with its vendors , utilizes purchase order forms , and imposes leg-ends claiming proprietary rights upon specifications or drawingsfurnished to such vendors , whereby the latter are restricted fromselling parts produced for Curtiss-Wright, or providing informa-tion furnished by the latter as to specifications for such parts , toanyone else.

(c) Parts of aircraft engines produced by one manufacturerare not interchangeable with corresponding parts of engines pro-

duced by another manufacturer a Curtiss-Wright crankshaftcould not be installed in a Rol1s-Royce engine or vice versa. Simi-larly, it is economically impractical , if not technically impossiblewhere an engine produced by one manufacturer has been instal1edin an aircraft to subsequently substitute therefor an engine pro-

duced by another manufacturer.

(d) Because of the absence of interchangeability of aircraft

engines and parts therefor , because of the patents , patent rightsand proprietary rights held , owned , asserted or claimed by Cur-tiss-Wright , and because of the restrictions respondent imposesupon vendors from which it obtains many of the parts for its air-craft engines, Curtiss-Wright is the sole source of supply formost of such engine parts. Thus , those who own or operate air-craft equipped with Curtiss-Wright engines must generally turnto respondent when they seek to purchase parts for the repair oroverhaul of such engines.

PAR. 6. Respondent has attempted to monopoJize , has monopo-lized and is monopoJizing the sale and distribution of parts for

aircraft engines it sells and distributes and has sold and distrib-uted. As part and parcel and in furtherance of such attempt tomonopolize and monopolization, respondent has engaged in, orpursued various acts or practices. Included among and ilustrativeof such acts or practices , although not necessarily Jimited theretowere the following:

(a) Selling or offering to sell engine parts at unreasonably lowprices approaching or below the cost of production and distribu-tion thereof for the purpose or with the effect of eliminating com-petition respondent encountered therein.

CURTISS-WRIGHT CORP. 385

382 Complaint

(b) Subsidizing such low prices by raising prices or charginghigher prices for parts as to which respondent encountered JiWeor no competition.

(c) Soliciting customers or potential customers for engineparts to agree to use only parts obtained from Curtiss-Wright orat least to endorse the latter s philosophy that only such parts

should be employed in the repair or overhaul of its engines;threatening cancellation of engine parts service adjustment poJi-cies extended to such customers if they did not so agree or en-

dorse such philosophy; policing or attempting to police through

field representatives the use of any parts obtained through anysource other than Curtiss-Wright and attempting to discouragethe use of such parts; and representing to customers or potentialcustomers for engine parts that parts obtained from any sourceother than Curtiss-Wright were "bogus" or otherwise disparag-ing or attempting to discourage the use of such parts notwith-

standing that certification of suitability for the projected usethereof in the form of "Parts Manufacturer Approval" had beenor may have been extended to some of such parts by the FederalAviation Agency or the Civil Aeronautics Administration.

(d) Requiring "Approved Overhaul Bases" to utilize engineparts obtained only from Curtiss-Wright and taking or proposingto take disciplinary action against a base which attempted to ob-tain parts from another source.

PAR. 7. (a) In addition to monopolizing and attempting to mo-

nopolize the sale and distribution of parts for its aircraft engines

respondent has attempted , through misuse and abuse of its monop-olistic and dominant position in the sale and distribution of suchparts , to eJiminate competition it encountered in the overhaul orrepair of Curtiss-Wright engines by the method or means interalia as hereinafter more particularly described and alleged.

(b) On or about June 8 , 1961 , the United States Governmentthrough the U.S. Army Transportation Material Command issueda request for proposals for the overhaul of Curtiss-Wright en-gines. Thereafter, in response to such request, proposals weresubmitted by Curtiss-Wright , Aerodex , Inc. , and American Airmo-tive Corporation , among others. The proposals of both AerodexInc. , and American Airmotive were lower than that submitted byCurtiss-Wright either upon the basis of parts being furnished bythe Government or by the contractor at commercial list less 25percent, with Aerodex being the lowest bidder.


Complaint 76 F.

(c) On or about September 15, 1961 , Curtiss-Wright advisedthe Government that Aerodex and American Airmotive would be

sold only at list price although . theretofore it had been extendinga 25 percent discount from commercial list prices, at least to

Aerodex. Curtiss-Wright confirmed this advice by wire of Sep-tember 18 , 1961.

(b) By communication of October 7 , 1961 , Curtiss-Wright ad-vised the Government that no aircraft engine parts at al1 wouldbe sold to Aerodex or American Airmotive.

(e) Curtiss-Wright so advised the Government as heretoforeal1eged in subparagraphs (c) and (d) for the purpose and withthe intent of eliminating Aerodex and American Airmotive ascompetitors for the business of overhauling Curtiss-Wright en-gines for which a request for proposals was issued as alleged insubparagraph (b).

PAR. 8. The acts , practices and methods of competition engaged, fol1owed, pursued or adopted by Curtiss-Wright , as hereinbe-

fore al1eged , constitute unfair acts , practices and methods of com-petition , the capacity, tendency or effect of which has been , is

now or may be to injure, eliminate or prevent competition be-

tween respondent and others engaged in the sale and distributionof parts for Curtiss-Wright aircraft engines and to injure , elimi-nate or prevent competition between respondent and others en-

gaged in the business of overhauling or repairing Curtiss-Wrightaircraft engines , al1 in derogation of the public interest and in vi-olation of Section 5 of the Federal Trade Commission Act.

ORDER DISMISSING COMPLAINT

This is before the Commission upon the hearing examiner

certification , filed August 15 , 1969 , of complaint counsel's motionto dismiss the complaint, and respondent's answer supportingsuch motion.

Complaint counsel assert that the significant lines of commercecovered by the complaint relate to respondent' s reciprocating air-craft engine parts and its overhauling activities with respect toreciprocating engines. It appears from an affdavit filed in CCmemby complaint counsel that jet engines have replaced most recipro-cating engines used hy the commercial airlines and that the mili-tary is in the process of replacing reciprocating engines as wel1.

Complaint counsel suggest , because of such changes in the mar-ketplace , that the complaint is no longer appropriate. In light of

CURTISS-WRIGHT CORP. 387

382 Order Dismissing Complaint

this and other circumstances which indicate a lack of public in-terest in pursuing the trial of this proceeding the Commissionhas determined that the complaint should be dismissed. Accord-

ingly,It is orde,' That the complaint in this proceeding be , and it

hereby is , dismissed.

By the Commission , with Commissioner Elman concurring

the result.

IN THE MATTER OF

METo:vnc MA:\UFACTURlNG CORPORATION, ET AL.

CONSENT ORDER , ETC. , IN REGARD TO THE ALLEGED VIOLATION OF THE

FEDERAL TRADE COMMISSION ACT

Docket C-1S8,q. Cornplaint , Sept. 1969-Decisl:on, Sept. , 1969

Consent order requiring a Brooklyn , X. , manufacturer and distributor ofclctctroplating kits to cease misrepresenting the quality or durability ofthe plating imparted by its process.

COMPLAINT

Pursuant to the provisions of the Federal Trade CommissionAct , and by virtue of the authority vested in it by said Act , theFederal Trade Commission, having reason to believe that Me-

tomic Manufacturing Corporation, a corporation, and MartinZahler , individual1y and as an offcer of said corporation , herein-after referred to as respondents , have violated the provisions ofsaid Act, and it appearing to the Commission that a proceedingby it in respect thereof would be in the public interest , hereby is-sues its complaint stating its charges in that respect as follows:

PARAGRAPH 1. Respondent Metomic Manufacturing Corporationis a corporation organized , existing and doing business under andby virtue of the laws of the State of ew York, with its offce

and principal place of business located at 92 Brighton 11thStreet , Brooklyn, New Yark. Respondent Martin Zahler, is the

sole offcer of the corporate respondent. He formulates, directs

and controls the acts and practices of the corporate respondent

including the acts and practices hereinafter set forth. His addressis the same as that of the corporate respondent.


Complaint 76 F.

PAR. 2. Respondents are now, and for some time last past havebeen engaged in the manufacture, advertising, offering for sale

and sale of electroplating kits to the public.PAR. 3. In the course and conduct of their business , respond-

ents now cause, and for some time last past have caused, their.

said electroplating kits when sold , to be shipped from their placeof business in the State of New York to purchasers thereof lo-cated in various other States of the United States and maintainand at all times mentioned herein have maintained , a substantialcourse of trade in said product in com:merc€, as '(commerce" isdefined in the Federal Trade Commission Act.

PAR. 4. In the course and conduct of their aforesaid business

and for the purpose of inducing the purchase of their electroplat-ing kits , the respondents have made , and are now making, numer-ous statements and representations in promotional material with

respect to the results to be achieved with their electroplating kits.Typical and illustrative of said statements and representations

but not aJl inclusive thereof , are the following:Professional Plating Results Obtained at Home for First Time.YOU CAN DO YOUR OWN CHROME PLATING PLUS 24 KT.PLATING.YOU CAN NOW DO YOUR OWN REAL ELECTROPLATING * * *

GOLD

PAR. 5. By and through the use of the above-quoted statementsand representations , and others of similar import and meaningbut not expressly set out herein, the respondents have repre-

sented , and are now representing, directly or by implication , that:1. Purchasers of said electroplating kits can achieve the same

finish and durability as imparted by commercial electroplatingmethods.

2. Purchasers of such electroplating kits can impart a chromeplating to any other material through the use of said kits.

3. Said kits actuaJly produce results through an electroplating

process.4. Purchasers of such kits wil be able to plate such objects as

automobile bumpers , washing machines or any other large objectwith the materials supplied in said kits.


1. Respondents ' kits do not supply the same finish and durabil-ity as commercial electroplating methods but instead produce thethinnest possible plating.

METOMIC MANUFACTURING CORP., ET AL. 389

387 Complaint

2. Respondents ' kits do not impart a chrome plating to anyother material , but instead contain a (lchrome-1ike" solution, com-prised of a small amount of chrome, some nickel and a large

amount of tin.3. Respondents ' kits do not actually produce results through an

electroplating process , but instead produce a plating through anelectroless" process.4. Respondents' kits do not plate such objects as automobile

bumpers , washing machines or any other large object but insteadcontain only enough of each plating solution to plate small ob-jects.

Therefore, the statements and representations as set forth inParagraphs Four and Five hereof were and are false , misleadingand deceptive.


and at all times mentioned herein, respondents have been , andnow are, in substantial competition , in commerce, with corpora-tions , firms and individuals in the sale of electroplating kits ofthe same general kind and nature as that sold by respondents.

PAR. 8. The use by respondents of the aforesaid false , mislead-ing and deceptive statements , representations and practices hashad, and now has , the capacity and tendency to mislead membersof the purchasing public into the erroneous and mistaken beliefthat said statements and representations were and are true andinto the purchase of substantial quantities of respondents ' prod-uct by reason of said erroneous and mistaken belief.

PAR. 9. The aforesaid acts and practices of respondents, as

herein alleged , were and are all to the prejudice and injury of thepublic and of respondents ' competitors and constituted , and nowconstitute , unfair methods of competition in commerce and unfairand deceptive acts and practices in commerce in violation of Sec-tion 5 of the Federal Trade Commission Act.

DECISION AND ORDER

The Federal Trade Commission having initiated an investiga-tion of certain acts and practices of the respondents named in thecaption hereof, and the respondents having been furnished there-after with a copy of a draft of complaint which the Bureau ofDeceptive Practices proposed to present to the Commission for itsconsideration and which, if issued by the Commission, would



charge respondents with violation of the Federal Trade Commis-sion Act; and

The respondents and counsel for the Commission having there-after executed an agreement containing a consent order , an ad-mission by the respondents of aU the jurisdictional facts set forthin the aforesaid draft of complaint , a statement that the signingof said agreement is for settlement purposes only and does not

constitute an admission by respondents that the law has been vio-lated as aUeged in such complaint, and waivers and other provi-sions as required by the Commission s Rules; and

The Commission having thereafter considered the matter andhaving determined that it had reason to believe that the respond-ents have violated the said Act, and that complaint should issuestating its charges in that respect , and having thereupon acceptedthe executed consent agreement and placed such agreement on thepublic record for a period of thirty (30) days, now in furtherconformity with the procedure prescribed in 34 (b) of its

Rules , the Commission hereby issues its complaint , makes the fol-lowing jurisdictional findings , and enters the foUowing order:

1. Respondent Metomic Manufacturing Corporation is a corpo-ration organized, existing and doing business under and by virtueof the laws of the State of New York , with its offce and principalplace of business located at 92 Brighton 11th Street, BrooklynNew York.

Respondent Martin Zahler is an offcer of said corporation andhis address is the same as that of said corporation.


ORDER

It is ordered That respondent Metomic Manufacturing Corpo-

ration , a corporation , and its offcers , and Martin Zahler, individ-ual1y and as an offcer of said corporation, and respondents

agents, representatives and employees , directly or through anycorporate or other device , in connection with the advertising, of-fering for sale , sale or distribution of electroplating kits , in com-merce , as '(commerce" is defined in the Federal Trade Commis-sion Act , do forthwith cease and desist from:

1. Representing, directly or by implication, that the

coating produced by the use of said kits or components is

METOMIC MANUFACTURING CORP., ET AL. 391


comparable in durability and other aspects to the finish im-parted by commercial electroplating.

2. Representing, directly or by implication , that their kitsor components are capable of imparting a chrome plating toany other materia1.

3. Representing, directly or by implication , that their kitsor components produce results through an electroplatingprocess.

4. Representing, directly or by implication , that their kitsor components contain enough materials to completely platesuch objects as automobile bumpers , washing machines orany other large object.

It is further ordered That the respondents herein shan , withinsixty (60) days after service upon them of this order , file withthe Commission a report in writing settng forth in detail the

manner and form in which they have complied with this order.By the Commission , with Commissioner Elman dissenting.

IN THE MATTER OF

SPIEGEL, INC.

ORDER , ETC. , IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERALTRADE COMMISSION ACT

Docket 8708. Complaint , Sept. 1966 Decision, Sept. , 1969

Order modifying an earlier order dated July 15 , 1968, 74 F. C. 185, whichprohibited a Chicago Ill. , catalog retailer from making fictitious pricingand savings claims , pursuant to a decision of the United States Court

of Appeals , Seventh Circuit , dated June 11 , 1969 , 411 F. 2d 481 , by cle

leting numbered Paragraph 3 from the original order.

ORDER MODIFYING ORDER TO CEASE AND DESIST

Respondent , having filed in the United States Court of Appealsfor the Seventh Circuit on October 2 , 1968 , a petition to reviewand set aside an order to cease and desist issued herein on July

, 1968 , and the Court having rendered its decision on June 111969 (8 S. & D. 942J, affrming the order to cease and desist , ex-cept for numbered Paragraph 3 of the order which it directed beeliminated:

Now, therefore , it is hereby ordered That the aforesaid order


Order Modifying Order to Cease and Desist 76 F.

to cease and desist be , and it hereby is, modified by deleting num-bered Paragraph 3 of the order.

It is further ordered That respondent, Spiegel, Inc. , sha11within sixty (60) days after service upon it of this order, file

with the Commission a report in writing, setting forth in detailthe manner and form in which it has complied with the order tocease and desist.

IN THE MATTER OF

NATIONAL DAIRY PRODUCTS CORPORATIO:\

ORDER , ETC. , IN REGARD TO THE ALLEGED VIOLATION OF SEC. 2 (a) THE CLAYTON ACT

Docket 8548. Complaint, Dec. 7, 1962-Decision, Oct. 2, 1969

Order modifying a ce9.se and desist order, dated June 28, 1967 , 71 F.1333, which prohibited a major food products distributor from discrimi-

nating in price among its customers , by limiting the prohibition , pur-suant to a decision of the United States Court of Appeals , Seventh Cir-cuit, 412 F. 2d 605 , dated June 19 , 1969 , to the jam , jelly and preserveproducts of the respondent company s Kraft Foods Division.

ORDER MODIFYING ORDER TO CEASE AND DESIST

Respondent having fied in the United States Court of Appealsfor the Seventh Circuit a petition to review and set aside theorder to cease and desist issued herein on June 28, 1967 (71

C. 1333); and the court on June 19, 1969 (8 S. & D. 948),having issued its opinion modifying and, as modified , affrmingand enforcing said order to cease and desist; and the time a110wed

for filing a petition for certiorari having expired and no such pe-tition having been filed;

Now, therefore , it u; hereby order' ed, That the aforesaid order ofthe Commission to cease and desist be , and it hereby is , modifiedin accordance with the said final decree of the court of appeals toread as fol1ows:

It is ordered That respondent N ationaJ Dairy Products Corpo-ration , a corporation , and its offcers , representatives , agents andemployees , directly or through any corporate device, in connectionwith the sale or offering for sale of jam , jeny and preserve prod-

NATIONAL DAIRY PRODUCTS CORP. 393

392 Order Modifying Order to Cease and Desist

ucts of its Kraft Foods Division , in commerce , as lIcommerce" is

defined in the Clayton Act, do forthwith cease and desist from:Discriminating, directly or indirectly, in the price of such

products of like grade and quality by se11ng such products toany purchaser for resale at a price which is less than theprice charged any other purchaser for resale at the sam

level of distribution when such lower price is either the re-sult of a reduction from the regular list price of the productsor is the result of a promotional offer involving a concessionfrom regular list price: Provided, however That in additionto the defenses set forth in Sections 2 (a) and 2 (b) of thestatute it shall be a defense in any enforcement proceedinginstituted hereunder for respondent (1) to establish that itslower price was the result of a promotional offer involving aprice concession which does not undercut the lowest net price

and/or the terms and conditions resulting from a promotionaloffer made to the purchaser receiving the lower price by anysel1er of a competitive product within the previous 12months, or (2) to establish that such lower price does notundercut the lowest price concurrently offered generally

throughout the same trading area by any other sel1er of acompetitive product having a substantially smaller annualvolume of sales of such products than respondent's annual

volume of sales of the product on which the discriminatoryprice was granted.

It is further ordered That respondent, National Dairy Prod-ucts Corporation, shall , within thirty (30) days after serviceupon it of this order, file with the Commission a report, in writ-ing, setting forth in detail the manner and form in which it hascomplied with the order to cease and desist set forth herein.


Complaint 76 F.

IN THE MATTER OF

EMPRESS STERLING CORPORATION, ET AL.

CO!\SENT ORDER, ETC. , IN REGARD TO THE ALLEGED VIOLATION OF THEFEDERAL TRADE COMMISSION ACT

Docket C-iSBO. Complaint, Oct. 6, 19G9-Decision, Oct. , 1969

Consent order requiring a Richmond , Va., marketer of cookware , tablewareand other household products to cease misrepresenting that prospective

customers are being called long distance, that its offering prices consti-tute a saving, that prospective purchasers have been specially selectedor wil receive any article free , making deceptive guarantee claims , in-

ferring that its products are advertised nationally, and implying that itis connected with the publishers of the International Sunday School Les-sons.

COMPLAINT

Pursuant to the provisions of the Federal Trade CommissionAct , and by virtue of the authority vested in it by said Act , theFederal Trade Commission , having reason to believe that Em-press Sterling Corporation, a corporation , and Ernest NT. Bern-stein , individual1y and as an offcer of said corporation, herein-after referred to as respondents , have violated the provisions ofsaid Act, and it appearing to the Commission that a proceedingby it in respect thereof would be in the public interest , hereby is-sues its complaint stating its charges in that respect as fonows:PARAGRAPH 1. Empress Sterling Corporation is a corporation

organized , existing and doing business under and by virtue of theJaws of the State of Virginia , with its principal offce and place ofbusiness located at 120 South 6th Street, Richmond, Virginia23219.

Respondent Ernest M. Bernstein is an individual and an offcerof the corporate respondent. He formulates , directs and controlsthe acts and practices of the corporate respondent , including theacts and practices hereinafter set forth. His address is the sameas that of the corporate respondent.

PAR. 2. Respondents are now, and for some time last past havebeen , engaged in the advertising, offering for sale , sale and distri-bution of various types of household products, including cook-ware , tableware, china ware and books to the public.

PAR. 3. In the course and conduct of their business as afore-said , respondents now cause, and for some time last past have

EMPRESS STERLING CORP., ET AL. 395

394 Complaint

caused , their said products , when sold , to be shipped from theirplace of business in the State of Virginia to purchasers thereof

located in various other States of the United States and in theDistrict of Columbia, and maintain, and at all times mentionedherein have maintained, a substantial course of trade in said

products in commerce , as "commerce" is defined in the FederalTrade Commission Act.


and for the purpose of inducing the purchase of their products

the respondents have made , and are now making, numerous state-ments and representations in advertisements placed in newspa-pers , in promotional material and in recorded telephone solicita-tions with respect to price , guarantees , value, customer selectionproduct advertisement, and other aspects of their products and

the selling methods thereof.

Typical and ilustrative of said statements and representationsbut not al1 inclusive thereof , are the fol1owing:LISTEN FOR YOl:R PHONE TO RING! IT'S LONG DISTANCE! Em-press Company of Richmond , Va. :VIA Y CALL YOU THIS MONTH! Be amember of the Empress Long Distance Telephone Plan.Your name was selected here today to receive a $50 enrollment award in theLong Distance Telephone Club Plan on a 17-piece set of Regal StainlessSteel Waterless Cookware , or on a 60-piece set of Willam A. Rogers Silver-plate knives , forks and spoons.

The set (cookware) is made to sell for $149. , but listen to this , your totalcost is only two and a quarter a week , $2.25 per week or $99.95.

The set (silverware) normally sells for $149.95 on a regular dinner partyplan

* * *

There is no down payment , no c. d. no interest charges, no carryingcharges , no service charges, no postage charges.As a free gift we re going to send you a sugar shell , a butter spreader , apierced tablespoon and cold meat serving fork

* * *

and they are absolutely

free

* * *

As an added free gift , we re going to send you a beautiful hard-wood chest for you to keep the silver in.Anyone

* * *

can put aside a few pennies a day for a set of silverplatewhich wil last a lifetime. In fact, it is guaranteed to last a lifetime.You ve probably seen it advertised in Good Housekeeping, or one of the lead.ing magazines. Kow we ll ans\vcr your questions about it in just a momentbut first I want to tell you that we are sending you a 60-piece set of Wil-liam A. Rogers silverplate.

* * *

It is the finest imported Bohemian china that money can buy. The name ofthe set is Royal Heiden Society china.

* * * I want to tell you that you re going to save tcn to twelve dollars amonth on your food bil by having this set of cookware.


Complaint 76 F.

We have just made arrangements to cooperate with the International Sun-day School Lessons and we are sending you a * * * Bible.

* * *

As an added feature we win emboss your name in gold on the front of bothbooks.

PAR. 5. By and through the use of the above-quoted statementsand representations , and others of similar import and meaningbut not expressly set out herein, the respondents have repre-

sented , and are now representing, directly or by implication:1. That prospective purchasers are being cal1ed by respondents

by long distance telephone from their place of business in Rich-mond , Virginia.

2. That prospective purchasers are afforded a discount or sav-

ings in the amount of $50 from the price of $149.95 at which

either the 17 piece set of Regal Stainless Steel cookware or the 60piece set of WilJiam A. Rogers silverpJate has been openly and ac-tively offered for sale for a reasonably substantial period of timein good faith by respondents in the recent regular course of theirbusiness.

3. That prospective purchasers have been special1y selected for

enrollment in respondents ' Long Distance Telephone Club Planand by virtue thereof have won a prize or award.

4. That the price of $149.95 for the set of cookware or the setof silverware referred to in Paragraph 2 hereof does not appreci-ably exceed the price at which substantial sales of each of saidsets is being made in respondents ' trade area.

5. That purchasers of respondents ' products pay no interest, carrying, service , or postage charges.

6. That purchasers of respondents ' silverware receive a sugarshell, butter spreader , tablespoon, fork and chest as additionalitems of merchandise free , as a gift and at no extra cost. (Otheritems are similarly offered with the purchase of cookware , books

etc.7. That respondents' products are unconditionaJly guaranteed

for a Jifetime.

8. That products sold by respondents are advertised in Good

Housekeeping magazine and in leading national magazines.9. That the Royal Heiden Society Bohemian china sold by re-

spondents is the finest, that is , the best quality, imported Bohe-

mian china that can be purchased in this country.


394 Complaint

10. That users of respondents' stainless steel cookware wiJ

save $10 to $12 per month on food.11. That respondents are cooperating with an organization

called International Sunday School Lessons in the sale of a biblewhich wiJ have purchasers ' names embossed in gold on the cover.


1. Prospective purchasers in a substantial number of instancesare not being cal1ed by respondents by long distance telephonefrom their place of business in Richmond , Virginia , but by re-spondents ' representatives from local telephones.

2. The price of $149.95 is not the price at which respondentshave openly and actively offered said articles for sale, for a rea-sonably substantial period of time, in good faith, in the recent

regular course of their business and purchasers are not afforded

a saving of $50 on the purchase of each set. Respondents ' offereach of these sets to everyone at $149.95 less $50 , hence $99. 95 isrespondents' actual bona fide regular price and the representedsaving of $50 is therefore nonexistent.

3. Prospective purchasers have not been specially selected forenrollment in respondents ' Long Distance Telephone Club Plannor have they won a prize or award. Their names are taken indis-criminately from telephone books. Furthermore, respondents

Long Distance Telephone Club Plan is not a club plan at all , butis merely a name used to add to the iIusion that persons calledare members of a select group.

4. The price of $J 49.95 for the set of cookware or the set of

silverware appreciably exceeds the price at which substantialsales of each of said sets is being made in respondents ' tradearea.

5. Purchasers of respondents ' products pay interest , c.

carrying service and postage charges. Such charges , when appli-cable , are included in the purchase price without being revealedto the purchaser.

6. Purchasers of respondents ' products do not receive theaforesaid items of merchandise free as a gift or at no extra cost.The price of the purported gift is included in the price of thepurchased product.

7. The guarantee of respondents ' products is subject to signifi-cant limitations and conditions which are not disclosed in the ad-vertising and said advertising does not designate the lifetime dur-

ing which said guarantee applies.


Complaint 76 F.

8. Products sold by respondents are not advertised in Good

Housekeeping or in other magazines.9. The Royal Heiden Society Bohemian china is not the finest

that is , the best qualiy, imported Bohemian china that can bepurchased in this country.

10. Users of respondents ' stainless steel cookware wi1 not save$10 to $12 per month , or any significant amount , on food.

11. The organization International Sunday School Lessons re-ferred to by respondents in connection with the sale of the bibleis fictitious; and the purchaser s name is not embossed in gold onthe cover, but is printed on a tape which is attached to the cover.

Therefore , the statements and representations as set forth inParagraphs Four and Five hereof were and are false , misleadingand deceptive.

PAR. 7. In the course and conduct of their aforesaid businessand at an times mentioned herein, respondents have been , andnow are, in substantial competition , in commerce, with corpora-tions, firms and individuals in the sale of household products ofthe same general kind and nature as that sold by respondents.

PAR. 8. The use by respondents of the aforesaid false, mislead-ing and deceptive statements, representations and practices hashad , and now has , the capacity and tendency to mislead membersof the purchasing public into the erroneous and mistaken beliefthat said statements and representations were and are true andinto the purchase of substantial quantities of respandents ' prod-ucts by reason of said erroneous and mistaken belief.

PAR. 9. The aforesaid acts and practices of respondents, asherein aneged , were and are an to the prejudice and injury of thepublic and of respondents ' competitors and constituted , and nowconstitute, unfair methods of competition in commerce and unfairand deceptive acts and practices in commerce in violation of Sec-tion 5 of the Federal Trade Commission Act.

DECISION A:-D ORDER

The Federal Trade Commission having initiated an investiga-tion of certain acts and practices of the respondents named in thecaption hereof, and the respondents having been furnished there-after with a copy of a draft of complaint which the Bureau ofDeceptive Practices proposed to present to the Commission for itsconsideration and which, if issued by the Commission, wouldcharge respondents with violation of the Federal Trade Commis-sion Act; and



The respondents and counsel for the Commission having there-after executed an agreement containing a consent order , an ad-mission by the respondents of all the jurisdictional facts set forthin the aforesaid draft of complaint , a statement that the signingof said agreement is for settlement purposes only and does not

constitute an admission by respondents that the law has been vio-lated as alleged in such complaint and waivers and other provi-sions as required by the Commission s Rules; and

The Commission having thereafter considered the matter andhaving determined that it had reason to believe that the respond-ents have violated the said Act, and that complaint should issuestating its charges in that respect, and having thereupon acceptedthe executed consent agreement and placed such agreement on thepublic record for a period of thirty (30) days , now in furtherconformity with the procedure prescribed in 34 (b) of its

Rules , the Commission hereby issues its complaint, makes the fol-lowing jurisdictional findings , and enters the following order:

1. Respondent Empress Sterling Corporation is a corporationorganized , existing and doing business under and by virtue of thelaws of the State of Virginia, with its principal offce and place of

business located at 120 South 6th Street, Richmond , Virginia23219.

Respondent Ernest M. Bernstein is an offcer of said corpora-tion and his address is the same as that of said corporation.


ORDER

It is ordered That the respondents , Empress Sterling Corpora-tion , a corporation , and its offcers , and Ernest M. Bernstein, in-dividually and as an offcer of said corporation , and respondentsagents, representatives and employees , directly or through anycorporate or other device , in connection with the advertising, of-fering for sale , sale or distribution of cookware , tableware , china-ware, books , or any other product, in commerce , as ((commerceis defined in the Federal Trade Commission Act, do forthwithcease and desist from:

1. Representing, directly or by implication, that persons

called by local telephone are being cal1ed by long distance tel-ephone.


Decision and Order 76 F. T.

2. Representing, directly or by implication , that any priceamount is respondents ' regular se1lng price for any item ofmerchandise or that purchasers save $50 or any otheramount from respondents ' se1lng price unless the amount re-ferred to as respondents ' se1lng price is the price at whichsaid item of merchandise has been openly and actively soldor offered for sale, for a reasonably substantial period of

time, in good faith, by respondents in the recent regularcourse of business; or misrepresenting, in any manner, theprice at which respondents ' merchandise has been sold oroffered for sale.

3. Falsely representing that savings are afforded purchas-

ers or prospective purchasers; or misrepresenting, in any

manner, the amount of savings available to purchasers orprospective purchasers.

4. Representing, directly or by implication, that the pro-spective purchaser has been specially selected for enro1Jmentin a club or other organized group plan , or has won a prizeor award; or misrepresenting, in any manner , the nature orpurpose of a purchaser solicitation.

5. Representing, directly or by implication , that a price isthe retail price of a product in respondents ' trade area unlesssuch price does not appreciably exceed the price at which

substantial sales of said product are being made in said tradearea.

6. Representing, directly or by implication, that purchas-

ers of respondents ' products wi1 not have to pay any c.postage , interest , carrying or service charges.

7. Representing, directly or by implication, that any arti-cle of merchandise is being given free or as a gift, or with-out cost or charge , in connection with the purchase of othermerchandise unless the stated price of the merchandise re-quired to be purchased in order to obtain said article is thesame or less than the customary and usual price at whichsuch merchandise has been sold separately for a substantialperiod of time in the recent and regular course of business in

the trade area in which the representation is made.8. Representing, directly or by implication, that their

products are guaranteed unless the nature, conditions andextent of the guarantee, the identity of the guarantor and themanner in which the guarantor wi1 perform thereunder are



clearly and conspicuously disclosed; and where the guaranteeextends for the "Life" or "Lifetime" or the Jike and relatesto any life other than that of the original purchaser , the Jifereferred to shal1 be clearly and conspicuously disclosed.

9. Representing, directly or by impJication, that their

products are advertised in Good Housekeeping magazine orin leading national magazines; or misrepresenting the man-ner or extent of their advertising.

10. Representing, directly or by implication, that their

Royal Heiden Society Bohemian china ware products are thefinest, that is , the best quaJity imported Bohemian china thatcan be purchased in this country; or misrepresenting, in anymanner, the quality or value of their products.

11. Representing, directly or by implication , that the userof respondents' stainless steel cookware products wiJ save

$10 to $12 per month from the purchaser s food purchasing

biJ; or falsely representing the savings which accrue to usersof respondents ' cookware products.

12. Representing, directly or by impJication, that they

have made any arrangement, or are working in cooperationwith , an organization known as International Sunday SchoolLessons in the sale of their Bible products; or misrepresent-

ing, in any manner, respondents ' connections or affliationswith businesses or organizations.

13. Representing, directly or by implication , that they wiJemboss or print the purchaser s name in gold on the coversof their book products, when in fact the names are merely

printed on an adhesive-backed tape which is affxed to thecovers.

It is further ordered That the respondent corporation sha1lforthwith distribute a copy of this order to each of its operatingdivisions.

It is further ordered That the respondents herein sha1l , withinsixty (60) days after service upon them of this order, file withthe Commission a report in writing setting forth in detail the

manner and form in which they have compJied with this order.


Complaint 76 F.

IN THE MATTER OF

TOPS FURNITURE COMPANY, INC. , ET AL.

CONSENT ORDER , ETC. , IN REGARD TO THE ALLEGED VIOLATION OF THE

FEDERAL TRADE COMMISSION ACT

Docket C-1591. Complaint, Oct. 6, 1969-Decision, Oct. , 1969

Consent order requiring a Washington , D. , retailer of furniture and appli-ances to cease using unfair credit practices by failing to disclose to eus.tamers the legal import of its conditional sales contract, tendering anyincomplete instrument for signature, failng to disclose the details of its

finance charge" system , and using debt collection forms which simulatelegal documents.

COMPLAINT

Pursuant to the provisions of the Federal Trade CommissionAct , and by virtue of the authority vested in it by said Act , theFederal Trade Commission , having reason to believe that Tops

Furniture Company, Inc. , a corporation , and Milton Mecklar , in-dividually and as an offcer of said corporation , hereinafter re-ferred to as respondents , have violated the provisions of said Actand it appearing to the Commission that a proceeding by it in re-

spect thereof would be in the public interest hereby issues itscomplaint stating its charges in that respect as follows:

PARAGRAPH 1. Tops Furniture Company, Inc. , is a corporationorganized , existing and doing business under and by virtue of thelaws of the District of Columbia, with its principal offce and

place of business located at 1001 H Street , NE. , in Washington

Respondent Milton Mecklar is an individual and is an offcer ofthe corporate respondent. He formulates , directs , and controls theacts and practices of the corporate respondent , including the actsand practices hereinafter set forth. His address is the same asthat of the corporate respondent.

PAR. 2. Respondents are now , and for some time last past havebeen , engaged in the offering for sale , sale and distribution offurniture and appliances to the public. Respondents ' customers areprincipal1y of the low income group and a large amount of re-spondents ' sales to such customers are on credit.

PAR. 3. In the course and conduct of their business as afore-said, respondents now cause, and for some time last past have

TOPS FURNITURE CO. , INC., ET AL. 403

402 CompJaint

caused, their said products , when sold, to be shipped from theirplace of business in the District of Columbia to purchasers

thereof located in the District of Columbia , and maintain , and ata1l times mentioned herein have maintained, a substantial course

of trade in said products in commerce, as Hcommerce" is definedin the Federal Trade Commission Act.


and 'for the purpose of inducing prospective customers to enterinto contracts for the purchase of their furniture and appliances

respondents have engaged in the fo1lowing unfair and deceptiveacts and practices:

1. In a number of instances , respondents have had customersexecute a conditional- sales contract without informing the cus-tomers of the nature of the document and the legal import ofth,eir signing it.

2. In a number of instances , respondents have had customersexecute conditional sales contracts which may have been incom-plete since they did not, when executed, set forth financing orcarrying charges.

3. In a number of instances, respondents did not inform cus-tomers that financing charges would be levied or added to the ex-ecuted document.

4. In a number of instances , respondents have added financingcharges to already executed sales contracts without the custom-

s knowledge.5. In a number of instances , respondents

tomers with copies of the conditional saleshave signed.

6. Respondents have employed an after-acquired propertyclause in their conditional sales ageement which would make a1l

subsequent purchases from Tops subject to the previously exe-

cuted security agreement.7. Respondents have sent out a debt co1lection form which is

deceptively similar to a process paper which might be issued by acourt of law.

PAR. 5. In the course and conduct of their aforesaid business,and at a1l times mentioned herein, respondents have been , andnow are, in substantial competition , in commerce , with corpora-tions, firms and individuals in the sale of furniture and appli-ances of the same general kind and nature as those sold by re-spondents.

did not provide cus-

contract which they

404 FEDERAL TRADE COMMISSION DECISIO:-S

Complaint 76 F.

PAR. 6. The use by respondents of the aforesaid deceptive andunfair acts and practices has had , and now has , the capacity andtendency to mislead and deceive members of the purchasing pub-lic as to their rights and obligations and into the purchase of sub-stantial quantities of respondents' products by reason of suchdeception; and the use by respondents of the aforesaid falsemisleading and deceptive statements , representations and prac-tices has had, and now has , the capacity and tendency to misleaddebtors into the erroneous and mistaken belief that such repre-sentations were, and are true, and into the payment of sums ofmoney before their legal rights are ascertained by reason of saiderroneous and mistaken belief.

PAR. 7. The aforesaid acts and practices of respondents, asherein alleged , were and are all to the prejudice and injury of thepublic and of respondents ' competitors and constituted , and nowconstitute, unfair methods of competition in commerce and unfairand deceptive acts and practices in commerce in violation of Sec-tion 5 of the Federal Trade Commission Act.

DECISION AND ORDER

The Commission having heretofore determined to issue its com-plaint charging the respondents named in the caption hereof withviolation of the Federal Trade Commission Act, and the respond-ents having been served with notice of said determination andwith a copy of the complaint the Commission intended to issuetogether with a proposed form of order; and

The respondents and counsel for the Commission having there-after executed an agreement containing a consent order, an ad-mission by the respondents of all the jurisdictional facts set forthin the complaint to issue herein , a statement that the signing ofsaid agreement is for settement purposes only and does not con-

stitute an admission by respondents that the law has been vio-lated as alleged in such complaint, and waivers and other provi.sions as required by the Commission s Rules; and

The Commission having considered the agreement and havingaccepted same , and the agreement containing consent order hav-ing thereupon been placed on the public record for a period of 30days , now in further conformity with the procedure prescribed in

34 (b) of its Rules, the Commission hereby issues its com-plaint in the form contemplated by said agreement , makes thefol1owing jurisdictional findings , and enters the foJlowing order:

TOPS FURNITURE CO. , INC., ET AL 405


1. Respondent Tops Furniture Company, Inc. , is a corporationorganized . existing and doing business under and by virtue of theJaws of the District of Columbia, with its principal offce and

piace of business located at 1001 H Street, NE. , in Washington

Respondent Milton Mecklar is an offcer of said corporation andhis address is the same as that of said corporation.

2. The Federal Trade Commission has jurisdiction of the sub-ject matter of this proceeding and of the respondents , and the pro-ceeding is in the public interest.

ORDER

It is ordered That respondents Tops Furniture Company, Inc.a corporation, and its offcers, and Milton Mecklar, individuaUyand as an offcer of said corporation, and respondents' agents

representatives and employees , directly or through any corporateor other device , in connection with the offering for sale , sale ordistribution of furniture, appliances or other products, in com-merce , as "commerce" is defined in the Federal Trade CommissionAct, do forthwith cease and desist from:

1. Tendering to any customer for his signature or induc-ing or permitting a customer to sign a conditional salecontract or any other credit instrument without informing thecustomer of the nature of the document and the legal importof signing it.

2. Tendering to any customer for his signature or induc-ing or permitting a customer to sign a conditional sale con-

tract or any other credit instrument which is incomplete as

to finance or carrying charges.3. Failng to disclose oral1y and in writing to each cus-

tomer who executes a retail instaUment contract, or who oth-erwise purchases merch mdise or services from respondentson credit, before such customer obligates himself to make anysuch credit purchase , ail of the foilowing items:

(a) The cash price of the merchandise or servicepurchased.

(b) The sum of any amounts credited as downpay-ment (including any trade-in).

(c) The difference between the amount referred to inparagraph (a) and the amount referred to in paragraph(b).



(d) AU other charges, individuaUy itemized, whichare included in the amount of the credit extended but

which are not part of the finance charge.(e) The total amount to be financed (the sum of the

amount described in paragraph (c) pJus the amount de-scribed in paragraph (d)).

(f) The amount of the finance charge.(g) The finance charge expressed as an annual per-

centage rate.(h) The total credit price (the sum of the amounts

described in paragraph (e) plus the amount described inparagraph (f) and the number, amount , and due datesor periods of payments scheduled to pay the totaJ creditprice).

(i) The default, delinquency, or similar charges paya-ble in the event of late payments as weU as aU otherconsequences provided in the sales or credit agreementsfor late or missed payments.

(j) A description of any security interest held or tobe retained or acquired by respondents in connection

with the extension of credit , and a clear identification ofthe property to which the security interest relates.

(k) For purposes of this paragraph , the definition ofthe term "finance charge" and computation of the an-nual percentage rate is to be determined under ( 106and 107 ofj Public Law 90-321 , the "Truth in Lend-ing Act," and the regulations promulgated thereunder.

4. Adding finance charges to any conditional sale contractor other credit instrument after the contract or instrumenthas been signed without the knowledge of the customer.

5. Failing to supply each customer who executes a condi-tional sale contract or other credit instrument , a copy of thecontract or instrument at the time of execution by the cus-

tomer.6. Designating merchandise which is the subject of one re-

tail instal1ment contract as security for the buyer s perform-ance under any other retail instaUment contract.

7. FaiJng or refusing to pass title to the buyer ofmerchandise purchased under a retail instaUment contractwhen the ful1 time price of that merchandise has been paid.

TOPS FURNITURE CO. , INC. , ET AL. 407


8. Using any form of conditional sale contract or other in-strument of indebtedness which provides that merchandise

which is the subject of one contract wil be security for thebuyer s payment for subsequent purchases or that subsequentpurchases wi1 be added to and made a part of the originalagreement; or which permits directly or by implication , therespondents to refuse or fail to pass title to the buyer ofmerchandise when the full time price of that merchandisehas been paid.

9. Using a debt coJ1ection form or any similar writingwhich simulates a legal document or which resembles or isrepresented to be a document authorized , issued or approvedby a court of law or any other offcial or legaJ1y constitutedor authorized authority.

It is further ordered That the respondent corporation shaJ1

forthwith distribute a copy of this order to each of its operatingdivisions.

It is further ordered That respondents notify the Commissionat least 30 days prior to any proposed change in the corporate re-spondent such as dissolution , assignment or sale resulting in theemergence of a successor corporation, the creation or dissolution

of subsidiaries or any other change in the corporation which mayaffect compliance obligations arising out of the order.

It is further ordered That the respondents herein shal1 , withinsixty (60) days after service upon them of this order , fie withthe Commission a report in writing settng forth in detail themanner and form in which they have complied with this order.

IN THE MATTER OF

SWINGLINE INC.

ORDER , ETC. , IN REGARD TO THE ALLEGED VIOLATION OF SEC. 7 OF THECLAYTON ACT

Docket No. 8759. Complaint , Apr. 1, 1D68-Decision, Oct. 1969

Order requiring a Long Island City, N. , manufacturer of stapling, tackingand riveting devices to divest itself to an eligible company, approved bythe Commission, of all the assets , patents , and equipment of an acquiredcompany (Speedfast, Inc. ) ; to cause its wholly-o\vned subsidiary (Spot-nails , Inc. ) to grant a royalty- free license to said eligible company; torefrain for a period of 10 years from acquiring any competitor without


Complaint 76 F.

prior approval of the Federal Trade CommissIon; and take other stepsto restore competition in the industry as provided in the order.

COMPLAINT

The Federal Trade Commission , having reason to beJieve thatthe above-named respondent has violated Section 7 of the ClaytonAct, as amended , 15 D. , Section 18, by virtue of its acquisi-

tion of the assets of Spotnails , Inc. , and that a proceeding by it inrespect thereof would be in the pubJic interest, hereby issues thiscomplaint, stating its charges as follows:

Definitions

1. For the purposes of this complaint , the foHowing definitionsshall apply:

(a) "Portable industrial pneumatic staplers , naiJers and tack-ers" are tools which utilize compressed air to drive various typesof meta1lc fasteners to attach wood , fabric , sheet metal and othersubstances to each other. They do not include tools used for clos-ing corrugated containers.

(b) "Fasteners" are metallic staples , tacks, brads , nails , corru-gated clips and pins used in the machines described in subpara-

graph 1 (a).

Swingline Inc.

2. Respondent, Swing line Inc. ("Swingline ), is a corporation

organized and existing under the laws of the State of New Yorkwith its offce and principal place of business located at 32-

SkiUman Avenue , Long Island City, New York.3. SwingJine is a manufacturer and seHer of home, business

and industrial stapling, tacking, and riveting devices and fasten-ers used therein , adhesives , commercial stationery, offce recordkeeping and other misceHaneous offce equipment. For its fiscal

year ending August 31, 1966. Swingline had net sales of$60 316 414, total assets of $39 349,087, and net income of

821 916.4. Swingline had its origin in a business founded in 1925 by. Jack Linsky, which engaged in the distribution of stapling

SWINGLINE INC. 409

407 Complaint

machines and staples. By 1930 the business (which had since beenincorporated) had begun its own manufacture of such products.In 1939 the corporation was replaced by a partnership, SpeedProducts Co. , of which Mr. and Mrs. Jack Linsky were the solepartners. In 1946 the present corporation was incorporated underthe laws of the State of K ew York, under the name of SpeedProducts Co. , Inc. , to succeed to the business of the partnership.In 1956 the corporation changed its name to Swing line Inc. , andcontinued to be whoJly owned by Mr. and Mrs. Jack Linsky, whoalso were , and are now, offcers and directors of SwingJine. In1960 Swingline became a publicly held corporation when Mr. andMrs. Jack Linsky sold approximately 29% of the outstandingstock in a public offering.

5. In 1957 a whol1y owned subsidiary of Swingline acquired aJlthe assets of Ace Fastener Corporation, a manufacturer of sta-plers and staples , for $1 533 000. In 1959 Swingline became thecontroJling shareholder of Wilson Jones Company, a manufac-turer of a diversified line of commercial stationery and offce rec-ord keeping materials. In 1963 the operations of Wilson Jones

Company were consolidated into Swingline. In 1966 respondentacquired the Marson Corporation and Marson Fastener Corpora-tion for Swingline stock valued at about $4 mi1ion. Marson maderivets and rivet setting tools and various adhesives.

6. Swingline seJls its products throughout the United Statesand is, and for many years has been , engaged in "commercewithin the meaning of the Clayton Act.

Speedfa.,t Corpomtion

7. In 1954 Mr. and Mrs. Jack Linsky formed a corporationunder the name Swingline Industrial Corp. ("Industrial" ) to en-gage in the development and sale of a line of portable pneumaticstaplers, nailers and tackers for industrial purposes, togetherwith the fasteners required for such equipment. These products

were purchased or manufactured for and sold to Industrial bySwingline. Mr. and Mrs. Jack Linsky owned aJl the voting stockof Industria1.

8. In 1960 Industrial changed its corporate name to SpeedfastCorporation ("Speedfast" ). At about the same time, Speedfast es-tablished its own offces and manufacturing facilities in premisesleased from Swingline , where it commenced the manufacture of


Complaint 76 F.

its own portable industrial pneumatic staplers , nailers and tack-ers and supplies therefor. Mr. and Mrs. Jack Linsky continued toown all of Speedfast' s voting stock. Al1 the non-voting stock inSpeedfast was owned by members of :vr. and Mrs. Jack Linskyfamily.

9. In the year ending December 31, 1964 , Speedfast had totalsales of $2 602 158 and net income of $77 868. For the eightmonths ending August 31, 1965 , Speedfast had total sales of

121 870 and net income of $125 932. On August 31 , 1965

Speedfast' s total assets were $1 847 387. The company employedabout 200 people.

10. At all times relevant herein , Speedfast sold its products ininterstate commerce throughout the United States.

Spatnails , Inc.

11. Prior to its acquisition by a newly organized subsidiary ofrespondent on August 16 , 1965 , Spotnails , Inc. ("Spotnails ), wasa corporation organized and existing under the laws of the Stateof I1inois with its offce and principal place of business located at1100 Hicks Road , Ro11ng Meadows , I1inois.

12. Prior to its acquisition , Spotnails was a leading producer ofportable industrial pneumatic staplers , nailers and tackers andfasteners used therein. Spotnails ' plants were located in I1inoisCalifornia and :\ew Jersey. For its fiscal year ending October 311964 , total sales of Spotnails were $7 067 000 , total assets were

373 000 and net income was $250,000. About 400 people wereemployed by Spotnails.

13. On September 1 , 1965 , Swingline , through a new subsidiaryalso named Spotnails, Inc. , acquired al1 the outstanding stock ofSpeedfast from Mr. and Mrs. Jack Linsky and members of theirfamily for $2 500,000.

14. At al1 times relevant herein, Spotnails sold its products

throughout the United States and is, and for many years hasbeen , engaged in "commerce" within the meaning of the ClaytonAct.

Trade and Commerce

15. Portable industrial pneumatic staplers , nailers and tackersare utiized principally in the manufacture of furniture , the light

SWINGLINE INC. 411

407 Complaint

construction industry inc1uding both residential and commercialbuildings , the mobile home industry and woodworking industry.The devices are capable of substantial1y higher output than handdriven tools , greatly reduce worker fatigue, and are thus especiallydesirable where high volume production is encountered. The mar-ket for these products is expanding.

16. Portable industrial pneumatic staplers , nailers and tackersand fasteners were manufactured , distributed and sold in theUnited States by approximately 20 domestic companies in 1964.

The seven largest companies , incJuding Spotnails and Speedfastaccounted for about 90% of al1 such domestically-produced de-vices sold in the United States in 1964. In 1964 , Spotnails andSpeedfast accounted for approximately 15% and 5%, respec-tively, of the total United States production and sale of portableindustrial pneumatic staplers , nailers and tackers and fasteners.

17. Prior to August 16, 1965 , Spotnails and Speedfast weresubstantial competitors in the sale of portable industrial pneu-

matic staplers , nailers and tackers and fasteners.

ViolrLtion Charged

18. On August 16 , 1965 , Swingline , through a subsidiary nowknown as Spotnails , Inc. , acquired al1 the assets of Spotnails inexchange for 75 428 shares of Swingline common stock having anapproximate market value of $3, 100 000. At the time of the ac-

quisition of Spotnails , Mr. and Mrs. Jack Linsky owned approxi-mately 41 % of Swingline s common stock , were offcers and direc-tors of Swingline , and owned all the voting stock of Speedfast.

19. By virtue of the common ownership of Swingline andSpeedfast stock by Mr. and Mrs. Linsky, the effect of the acquisi-tion of Spotnails may be substantially to lessen competition or totend to create a monopoly throughout the Vnited States in viola-tion of Section 7 of the Clayton Act , in that:

(a) Substantial, actual and potential competition between

Speedfast and Spotnails in the production, distribution and sale

of portable industrial pneumatic staplers , nailers and tackers andfasteners has been eliminated.

(b) Concentration in the production , distribution , and sale ofportable industrial pneumatic staplers , nailers and tackers andfasteners has been increased.


Complaint 76 F.

(c) New entry into the manufacture , distribution and sale ofportable industrial pneumatic staplers, nailers and tackers andfasteners may be inhibited or prevented.

(d) Consumers have been denied the benefits of free and opencompetition in the sale and distribution of portable industrialpneumatic staplers , nailers and tackers and fasteners.

Mr. William A. Arbitman and Mr. William S. Farmer, Jr. sup-porting the complaint.

Hogan Hartson by Mr. George W. Wise and Mr. Timothy J.Bloomfield Washington , D. Mr. Sandor C. Schweiger Long Is-land City, New York, for respondent.

INITIAL DECISION BY ANDREW C. GOODHOPE , HEARING EXAMINER

JULY 30 , 1969

The Federal Trade Commission issued its complaint against re-spondent on April 1 , 1968 , charging it with violation of Section 7of the Clayton Act, as amended (38 Stat. 731; 15 D. C. 18). Therespondent filed an answer in which it admitted certain allega-tions of the complaint but denied that it had violated Section 7 of

the Clayton Act.The complaint charged that a violation of Section 7 of the Clay-

ton Act resulted from the acquisition by respondent , Swinglinethrough a subsidiary, of al1 the assets of a corporation known asSpotnails , Inc. Subsequently SwingUne , through a subsidiary, ac-quired all the outstanding stock of a competitor of Spotnails , Inc.,Speedfast Corporation. The voting stock of Speedfast was ownedby Mr. and Mrs. Jack Linsky, who owned approximately 41 % ofthe common stock of Swingline. The complaint charged that as aresult of the control of respondent Swingline and the ownershipof Speedfast by the Linsky family, the acquisition of Spotnailsmay substantially lessen competition or tend to create a monop-oly.

This matter has been before the Commission on two previousoccasions as a result of certifications by the examiner of motionsto withdraw the matter from adjudication in attempts to settethe case without tria1. On both occasions the Commission has re-jected the settlement proposals. Now after lengthy negotiationsbetween counsel in support of the complaint and counsel for re-spondent , the matter is before the hearing examiner on the basisof a stipulation of facts and a stipulated order. Counsel for both

SWINGLINE INC. 413

407 Initial Decision

parties have agreed to and have signed the stipulation of factscontaining a stipulated order and have filed a joint memorandumsetting forth their reasons in justification of the stipulated order.The .stipulation is made solely for the purpose of disposing of thismatter without trial.

The record before the hearing examiner consists of the com-plaint, respondent's answer thereto, the stipulation of facts con-

taining stipulated order and joint memorandum in support of theagreed upon order.

The hearing examiner, having considered the entire record out-lined above , makes the folJowing findings of fact, conc1usionsdrawn therefrom , and issues the folJowing order.

FINDINGS OF FACT

1. Respondent, Swingline Inc. ("Swingline ), is a corporation

organized and existing under the laws of the State of New Yorkwith its offce and principal place of business located at 32-

SkiUman Avenue , Long Island City, New York (Para. 2 ofComp. ; Admitted Para. 1 of Answer).

2. Swingline is a manufacturer and seller of home , business

and industrial stapling, tacking, and riveting devices and fasten-ers used therein , adhesives, commercial stationery, offce recordkeeping and other miscellaneous offce equipment. For its fiscalyear ending August 31, 1966, Swingline had net sales of$60 316 414, total assets of $39 349 087, and net income of

821 916. (Paras. 1 and 3 of Comp. ; admitted Para. 1 of An-swer; Stip. CX 1 A-

3. Swingline had its origin in a business founded in 1925 byMr. Jack Linsky, which engaged in the distribution of staplingmachines and staples. By 1930 the business (which had sincebeen incorporated) had begun its own manufacture of such prod-ucts. In 1939 the corporation was replaced by a partnership,Speed Products Co. , of which Mr. and Mrs. Jack Linsky were the

1 For the purposes of this initial decision , the following- definitions shall apply:(a) "Portable industrial pneumatic staplers and nailers" are tools which utilize compressed

air to drive various tyves of metallic fa. teners to attach wood , fabric, sheet metal and othersubstances to each other.

(b) "Fasteners" are staples , nails, brads , pins and corrugated clips which are used in themachines described in subparagraph 1 (a).

(c) The term "heavy-duty" when used in conjunction with the fasteners defined in subpara-gTaph 1 (b) shall describe staples , nails and corrugated clips having a gauge measurement ofeighteen (18) or less, and pins and brads having a gauge measurement of sixteen (16) or less.When used in conjunction with the machines described in subparagraph 1 (a), the term "heavy-duty " shall mean that such machines are designed to drive heavy-duty fasteners.


Initial Decision 76 F.

sole partners. In 1946 the present corporation was incorporatedunder the Jaws of the State of New York , under the name ofSpeed Products Co. , Inc. , to succeed to the business of the part-nership. In 1956 the corporation changed its name to SwinglineInc. and continued to be who1ly owned by Mr. and Mrs. Jack Lin-sky, who also were, and are now, offcers and directors of Swing-line. In 1960 Swingline became a publicly held corporation whenMr. and Mrs. Jack Linsky sold approximately 29% of the out-standing stock in a public offering (Para. 4 of Camp. ; admittedPara. 1 of Answer).

4. In 1957 a wholly owned subsidiary of Swingline acquired a1lthe assets of Ace Fastener Corporation , a manufacturer of sta-plers and staples, for $1 533,000. In 1959 Swingline became thecontrol1ing shareholder of Wilson Jones Company, a manufac-turer of a diversified line of commercial stationery and offce rec-ord keeping materials. In 1963 the operations of Wilson Jones

Company were consolidated into Swingline. In 1966 respondentacquired the Marson Corporation and Marson Fastener Corpora-tion for Swingline stock valued at about $4 million. Marson maderivets and rivet setting tools and various adhesives (Para. 5 ofComp. ; admitted Para. 1 of Answer).

5. Swingline seJJs its products throughout the United Statesand is , and for many years has been , engaged in "commercewithin the meaning of the Clayton Act (Para. 6 of Comp. ; admit-ted Para. 1 of Answer).

6. Heavy-duty portable industrial pneumatic staplers and naiJ-ers are used primarily in the furniture making industry, residen-tial construction industry and the mobile home manufacturingindustry to obtain higher output and greater effciency than isyielded by hand powered tools , such as hammers and hand oper-ated staplers. These heavy duty staplers and nailers are especia1lydesirable for high voJume production. The use of these tools is in-creasing substantia1ly, with the result that the manufacture andsale of the tools and fasteners used therein is also expanding

(Stip. CX 1 B-C).7. Heavy-duty industrial pneumatic staplers and nailers are

technica1ly sophisticated, and they are generally manufacturedunder patents. These tools , furthermore , are constantly being re-fined and improved through research and development and theseadvancements are quite often patented themselves (Stip. CX 1

C).

SWINGLINE INC. 415


8. During 1965 there were only about seven domestic producers

of heavy-duty portable industrial pneumatic staplers and nailers.Spotnails , Inc. (an minois corporation hereinafter referred to asSpotnails), was a leading producer of such machines and Speed-fast Corporation (hereinafter referred to as Speedfast) was asubstantial competitor of Spotnails in this industry. RespondentSwingline was not engaged in the production , distribution or saleof heavy-duty portable industrial pneumatic staplers , nailers orfasteners until respondent's acquisition of Spotnails and Speed-fast as described below (Stip. CX 1 C).

9. On August 16 , 1965 , Swingline , through its newly formedsubsidiary, Spotnails , Inc., acquired al1 the assets of -Spotnails inexchange for 75 428 shares of Swingline common stock having anapproximate value of $3 100,000. At the time of the acquisitionof Snotnails , Mr. and Mrs. Jack Linsky owned approximately 41 of Swingline s common stock and were offcers and directors ofSwingline (Stip. CX 1 C).

10. Prior to its acquisition by a newly organized subsidiary ofrespondent on August 16 , 1965 , Spotnails , Inc. , was a corporationorganized and existing under the laws of the State of Ilinoiswith its offce and principal place of business located at 1100Hicks Road , Ro11ng Meadows, Ilinois (Para. 11 of Comp. ; admit-ted Para. 1 of Answer).

11. Prior to its acquisition , Spotnails was a leading producer ofportable industrial pneumatic staplers , nailers and tackers andfasteners used therein. Spotnails ' plants were located in IlinoisCalifornia and New Jersey. For its fiscal year ending October 311964 , total sales of Spotnails were $7 067 000 , total assets were

373,000 and net income was $250 000. About 400 people wereemployed by Spotnails (Par. 12 of Comp. ; admitted Para. 1 ofAnswer) .

12. On September 1 , 1965 , Swingline , through a new subsidiaryalso named Spotnails, Inc. , acquired all the outstanding stock ofSpeedfast from Mr. and Mrs. Jack Linsky and members of theirfamily for $2.500.000 (Para. 13 of Comp. ; admitted Para. 1 ofAnswer; Stip. CX 1 D).

13. In 1954 Mr. and :vrs. Jack Linsky formed a corporation

under the name Swingline Industrial Corp. ("Industrial" ) to en-

gage in the development and sale of a line of portable pneumaticstaplers , nailers and tackers for industrial purposes , togetherwith the fasteners required for such equipment. These products



were purchased or manufactured for and sold to Industrial bySwingline. Mr. and Mrs. Jack Linsky owned all the voting stockof Industrial. (Para. 7 of Comp. ; admitted Para. 1 of Answer.

14. In 1960 Industrial changed its corporate name to SpeedfastCorporation (Speedfast). At about the same time , Speedfast es-tablished its own offces and manufacturing facilities in premisesleased from Swingline , where it commenced the manufacture ofits own portable industrial pneumatic staplers, nailers and tack-ers and supplies therefor. Mr. and Mrs. Jack Linsky continued toown aU of Speedfast' s voting stock. AU the non-voting stock inSpeedfast was owned by members of Mr. and Mrs. Jack Linskyfamily (Para. 8 of Comp. ; admitted Para. 1 of Answer).

15. In the year ending December 31 , 1964 , Speedfast had totalsales of $2 602 158 and net income of $77 868. For the eightmonths ending August 31 , 1965 , Speedfast had total sales of

121 870 and net income of $125 932. On August 31 , 1965Speed fast' s total assets were $1 847,387. The company employedabout 200 .people (Para. 9 of Comp. ; admitted Para. 1 of An-swer).

16. At aU times relevant herein , both Spotnails and Speedfastsold their products throughout the United States and are, and formany years have been engaged in "commerce" within the mean-ing of the Clayton Act (Para. 10 and 14 of Comp. ; admittedPara. 1 of Answer).

17. By virtue of their positions as founders , dominant stock-holders , offcers (Mr. Linsky being president and Mrs. Linskybeing treasurer of Swingline) and directors (Mr . Linsky beingchairman of the board) of Swingline , Mr. and Mrs. Linsky werein a position to influence the conduct and direction of respond-ent' s business. At the same time, Mr. and Mrs. Linsky were alsosole owners of Speedfast's voting stock and thereby controlledthat corporation (Stip. CX 1 D).

18. Prior to the acquisition of Speed fast, Inc. , by respondent'new subsidiary Spotnails , Inc. , in 1965 , Speedfast and Spotnailswere totally unrelated and distinct organizations. After the ac-quisition and merger of these two organizations into the new cor-poration called "Spotnails , Inc. " a total integration of all of the

various functions and facilities of both corporations occurred andthe original Speedfast Corp. was dissolved. Among the changesmade in the corporations to avoid duplication of functions and in-

SWINGLINE INC. 417


sure that only the best features of the respective operations of

these companies would continue are these:(a) The Spot nails manufacturing plant and facilities of Clark

New Jersey, were shut down and its operations transferred to theLong Island City plant of Speedfast.

(b) Previous Speedfast manufacturing activities were shiftedto the Rollng Meadows plant operated by Spotnails in Ilinois.The result has been that the Rollng Meadows plant largely man-ufactures and assembles SpotnaiJs and Speedfast machines andthe Long Island City operations primarily produces fasteners forsuch machines.

(c) The products formerly sold by the two companies havebeen consolidated into one product line utilizing only theSpotnails" trade name and trademark.(d) There are no longer two independent research and develop-

ment functions and al1 research and development work is consoli-dated.

(e) A number of changes were made in supervisory personnelwith certain shifts between the two coruorations subsequent to theacquisition. This is also true in the Executive Departments ofboth companies. Very few of the Spotnails of I1inois executivesremained with the new company, and a number of new executiveshave been hired.

(f) Prior to the acquisition of Spotnails had a direct sales dis-tribution system employing salesmen dealing directly with theuser companies. Speedfast had independent distributors and didnot deal direct. Subsequent to the merger , both of these methodswere combined so that today Spotnails has a mixture of distribu-tors and direct salesmen. The sales force today is composed al-most entirely of persons hired by the new company.

(g) Spotnails today is a part of a large group of companies , ofwhich Swingline is the parent. The respondent Swingline per-

forms a number of important corporate functions for Spotnailsand its other subsidiaries for which they are charged and thesubsidiaries have no personnel to perform these functions. Forexample, the comptroller of respondent's Sv,ringline exercisesfinancial management and control over Spotnails, including costcontrol and money management. The international activities ofSpotnails are directed by Swingline s director of internationaloperations and is in charge of developing an foreign business forthe company.



Consequently, there has been virtually a complete integrationand .scrambling of the assets, operating personnel , research anddevelopment operations and sales and distribution facilities of thetwo corporations. (See affdavit of Marvin Libby, executive vice

president of Spotnails , Inc. , of New York and a vice president ofSwingline Inc. , attached to the joint memorandum in support ofthe agreed upon order filed by counsel for both parties.

cm';CLUSION

The effect of respondent' s acquisition of Spotnails and Speed-fast may be substantially to lessen competition or to tend to cre-ate a monopoly throughout the United States in violation of Sec-tion 7 of the Clayton Act , as amended , in that:

(a) Substantial actual and potential competition betweenSpeedfast and Spotnails in the production, distribution and sale

("f heavy-duty portable industrial pneumatic staplers and nailersand fasteners has been eliminated.

(b) Concentration in the production , distribution and sale ofheavy-duty portable industrial pneumatic staplers and nailers andfasteners has been increased (Stip. CX J D-E).

ORDER T'O CEASE AND DESIST

Preliminary Statement

Counsel in support of the complaint and counsel for respondenthave submitted a memorandum in support of agreed upon orderto cease and desist. This memorandum is in the record as Com-mission Exhibit 2 A-

As found above, the theory of the complaint is that commonownership of Swingline and Speedfast stock by the Linskys madeSwingline s acquisition of Spotnails anti competitive since it sub-

jected both Speedfast and Spotnails to common control. While thecomplaint is cast in terms of total sales of all types of portableindustrial pneumatic staplers and nailers and fasteners thereinthe stipulation and order to cease and desist are directed to heavy-duty tools and fasteners. It was in this market that the effect ofthe acquisition was direct and immediate. This is true since all ofSpotnails sales were in the heavy-duty field , while only ahout halfof the Speed fast sales were in the heavy-duty line. Consequently,both counsel for the parties agreed that it is the heavy-duty linewherein injunctive relief should be effected.

SWINGLINE INC. 419

407 Initial Dccision

Counsel urge that the agreed upon order would accomplish the

same objective as the order called for by the original complaint

and probably provide a more effective remedy than the entry ofsuch order after litigation.

The hearing examiner agrees that the proposed and agreed

upon order is the best possible relief under the circumstances ofthis matter.As found above, the complete integration of Speedfast and

Spotnails subsequent to the merger would make it virtual1y im-possible to put Spotnails back in a position where it could be a

viable corporation with some hope of success after divestiture.The respondent and its counsel have undertaken the duty as

provided in the order to present for approval by the Commissiona completely new company obliged to enter the heavy-duty porta-ble industrial pneumatic stapler , nailer and fastener industry. Re-spondent must satisfy the Commission that the new company wi1have financial resources suffcient to make a substantial entry intothe industry in terms of manufacturing space , production facili-ties and working capital.

The order bans respondent from making any furtheracquisitions in the broad industrial nailing, stapling and tackingfield for ten years. This was also provided for in the originalorder in the complaint.

The respondent , in order to insure the success of the new com-pany, has undertaken , as provided by the order , a number of du-ties. As found above , patents and patent protection in the indus-try is essential. With adequate patent rights, the new entrantshould find it relatively easy to become a manufacturer and sellerof these products. Fabricators to make the components of the ma-chines are readily available to manufacture the parts for easy as-sembly by a patent holder. Also the manufacturing machinesthemselves can readily by purchased. Plant space can be leased

and methods of distribution developed if adequate customers areavailable to it. The order provides that the respondent wi1 givethe new entrant not only a royalty-free license under all patentsheld by Spotnails and Speedfast at the time of the acquisition butalso provides for licensing the new entrant under several patentsrelating to the heavy-duty line which have been developed since

the acquisition , plus any such patents which are issued , filed oracquired by respondent for three years.

I n addition, the order requires respondent to supplement itspatent licensing by providing technical assistance, know-how



blueprints , designs , etc. , relating to the heavy-duty staplers , nail-ers and fasteners.

Respondent' s current inventory of Speedfast heavy-duty toolsis being divested to enable the new company to immediately beginselling a line of heavy-duty machines and al1 orders for these

Speedfast tools wi1 be forwarded to the new company as wel1 asorders for Speedfast fasteners. The new company wi1 also ac-quire respondent's entire inventory of Speedfast parts and beable to service the current users of Speedfast tools and supply

them with fasteners.In addition , res 1'010 dent will provide access to its suppliers of

components for Spotnails heavy-duty guns , plus a list of an sub-stantial customers of these guns. Consequently, the new companywi1 be able to sen fasteners and parts to the present users ofSpotnails line of heavy-duty tools in addition to the users of

Speed fast heavy- duty tools.Respondent win also provide technical assistance. The new

company wi1 be able to produce fasteners for Spotnails heavy-duty machines and the machines themselves. Respondent alsoagrees to purchase substantial volumes of fasteners from the newcompany for three years at respondent's distributor prices for

such fasteners. This wil give the new company a foothold in theindustry during the time required to develop and market its ownline of heavy-duty tools and fasteners.

The new company wil also have the use of the "Speedfast"trade name and trademarks.

The effect of the order will assure the presence of two competi-tors in the heavy-duty market , the new entrant and respondent.The new entrant should be on a relatively stable basis since itwould have the benefit of all of respondent' s present patents inthe heavy-duty field , plus new patents for three years. In addi-tion , the new company would have the use of a royalty-free li-cense in the corrugated aspect of the industry at least lesseningrespondent' s present dominance in this corrugated field. Theorder wi1 also open a large number of Spotnails gun users to newcompetition since the new company wil be able to service theirmachines , supply fasteners for them , and know who these cus-tomers are.

The examiner believes that the entry of the fonowing order tocease and desist wi1 effectively insure a new competitor in theheavy-duty fastener field and wi1 be more effective than an order

SWINGLINE INC. 421


to cease and desist after trial since the respondent has now un-dertaken the duty of cooperating in organizing the new entrantand insuring that it wil at least have a reasonable opportunity

for success which the respondent would be reluctant to do afterlitigation.

ORDER

For the purposes of this order, the fol1owing definitions shallapply:

(a) "Portable industrial pneumatic staplers and nail-ers" are tools which utilize compressed air to drive var-ious types of metal1c fasteners to attach wood , fabric,sheet metal and other substances to each other.

(b) "Fasteners" are metallic staples, nails, bradspins , and corrugated clips, which are used in the ma-chines described in subparagraph I (a).

(c) The term "heavy duty," when used in conjunctionwith the fasteners defined in subparagraph I (b), shalldescribe staples , nails and corrugated clips having agauge measurement of eighteen (18) or less , and pinsand brads having a gauge measurement of sixteen (16)or less. When used in conjunction with the machines de-scribed in subparagraph I (a), the term "heavy dutyshall mean that such machines are designed to driveheavy duty fasteners.

It is ordered That respondent shall as soon as practicable , butin no event in excess of one (1) year from the date this order be-comes final, present a financially sound and eligible company(hereinafter referred to as "eligible company ) and a contract

between respondent and said eligible company, both subject toCommission approval. Said contract shall provide that the eligiblecompany wil within one (1) year following Commission ap-proval , enter into business as a producer and seller of heavy dutyportable industrial pneumatic nailers and staplers , and as a man-ufacturer and sel1er of fasteners therefor.

It

;.,

further ordered That respondent , in connection with the

422 FEDERAL TRADE COMMISSION m:CISIONS


requirements of Paragraph II of this order , wi1 present an eligi-ble company with suffcient capital resources and financial capa-bility to assure , to the satisfaction of the Commission, that said

eligible company can provide for itself the fol1owing:1) manufacturing space suitable for the operation of a

heavy duty portable industrial pneumatic nailer , stapler , andfastener plant with capacity to produce annua11y a minimumof $2 000 000 of said fasteners and $500 000 of said nailersand staplers;

2) such machinery, equipment , facilities and other prop-erty as may be necessary to make such plant a sound and

going concern for the manufacture and sale annua11y of000 000 of heavy duty fasteners, and such machinery,

equipment , facilities and other property as may be necessaryto make such plant a sound and going concern for the finish-ing, assembling and se11ing annua11y of a minimum of$500 000 of heavy duty portable industrial pneumatic nailersand staplers;

3) adequate working capital for the opening and early ex-pansion of the business above described for a period of three

(3) years beginning with the opening of the plant for busi-ness.

It is further ordered That respondent sha11 within one year

from the date this order becomes final divest itself to eligible com-pany absolutely and in good faith of all the fol1owing assetsproperties , rights and privileges , tangihle or intangible , acquiredby said respondent as a result of its acquisition of the stock ofSpeedfast, Inc. , relating to the production , distribution and saleof a11 heavy duty portable industrial pneumatic nailers and sta-plers manufactured and sold by Speedfast prior to its acquisitionby respondent; al1 inventory in stock of said nailers and staplersand of parts therefor; names of suppliers of said nailers , staplersand parts; a list of a11 customers to which Speedfast productshave been sold, prior to and since September 1 , 1965; and a11

plans, drawings, blueprints , tooling, patents, trademarks andtrade names both domestic and foreign, which relate to the pro-duction distribution and sale of the said heavy duty portable in-dustrial pneumatic nailers and staplers. Each of said heavy dutyportable industrial pneumatic nailers and staplers is listed in Ap-

SWINGLINE INC. 423


pendix A hereto , and each of said patents , trademarks and tradenames is listed in Appendix B hereto.

It is fw.ther ordered That respondent shal1 cause its who1ly

owned subsidiary Spotnails, Inc. , to grant a royalty-free licenseto eligible company, if such license is desired by said company,under any or an of said Spotnails ' patents , patent applicatiuns

and know-how existing at the date of said divestiture and relatingto the manufacture , use or sale of an heavy duty portable indus-trial pneumatic nailers and staplers \;t,rhich were or are produceddistributed or sold by Spotnails. Each of said heavy duty portableindustrial pneumatic nailers and staplers is listed in Appendix Chereto , and each of said presently existing patents and patent ap-plications to be licensed is listed in Appendix D hereto.

It is further o'I"dered That respondent shan cause to be grantedto eligible company a license for a reasonable royalty, if such li-cense is desired by said company, under any and an future pat-ents , patent applications and know-how issued , filed or acquiredby respondent or any of its subsidiaries and , to the extent that ithas the right to do so, by any of its offcers , directors, agents

representatives and empJoyees within a period of three years fromthe date of divestiture relating to the manufacture , use or sale ofheavy duty portable industrial pneumatic staplers and nailers:Pr01;ided That the first Spotnails round-head nailer sha1l be in-cluded under such license regardless of when the patent for suchnailer shan issue.

VII

It is fU1.ther ordered That pending divestiture, respondent

shan not take any action with respect to any of the assets , prop-erties, rights and privileges of the former Speedfast, Inc. , re-quired to be divested hereby, which may impair their usefulnessfor the manufacture , sale or distribution of heavy duty portableindustrial pneumatic nailers and staplers , or their market value.

VIII

It is further ordered That , in accomplishing the aforesaid di-vestiture, respondent shan not sen or transfer the assets , proper-



ties , rights or privileges described in Paragraph IV of this orderdirectly or indirectly, to any person who, at the time of such di-

vestiture , is a stockholder , offcer , director , employee , or agent ofor otherwise directly or indirectly connected with or under thecontrol or influence of respondent, or to a subsidiary or affliatedcorporation of respondent , or to any person who is not approvedin advance by the Federal Trade Commission.

It is further ordered That respondent shall agree to purchasefrom the eligible company, for a period of three (3) years afteropening of its plant , heavy duty fasteners , or to assign customersorders therefor to said eligible company, in the fol1owingamounts: Two Hundred Fifty Thousand Dollars ($250,000) dur-ing the first year; Three Hundred Fifty Thousand Dollars($350 000) during the second year; and Two Hundred ThousandDollars ($200 000) during the third year. Respondent shall agree

to assign to said company all orders for heavy duty fasteners pre-viously manufactured and sold by Speedfast, and not manufac-tured and sold by Spotnails prior to August 16, 1965 , which areordered under the trade name or trademark "Speedfast. " The pur-chases or assignments of customers ' orders required by the firstsentence of this Paragraph shal1 be reduced by the dol1ar amountof customers ' orders assigned to eligible company pursuant to thesecond sentence of this Paragraph.

It is fU1.theT ordered That respondent shall assign to the eligi-ble company all orders received for Speedfast heavy duty porta-ble industrial pneumatic nailers and staplers and parts thereforwhich have been and are currently sold under the Speedfast tradename or trademark.

It is furtheT ordeTed That respondent's contract with the eligi-ble company for purchase and/or assignment of customers' or-

ders under Paragraph IX will be in form approved by the Com-mission with prices to be paid to the eligible company byrespondent equal to the lowest Spotnails' prices to distributors

for the items , or items of like kind , and with prices on any andall assigned orders billed directly by the eligible company to the

SWINGLINE INC. 425


customers or distributors at the price set forth in such assignedorders. The fasteners to be purchased or orders assigned thereforas provided in Paragraph IX shaJJ be manufactured to respond-ent's specifications or to the specifications stated on the assignedorders. Said contract may, upon the agreement of both partiesalso provide that the eligible company may consider any such as-signed business which it has been directly servicing with the cus-tomers as its own continuous volume at the risk of holding againstcompetitors other than respondent. Such purchases by respondentfrom eligible company shall consist of fasteners which said eligi-ble company informs respondent it has the capability of supply-ing, but in no case shall such purchases exceed actual orders byrespondent.

XII

It is further ordered That respondent shall cause Spotnails tosupply the eligible company, for a period of six months from thedate said company commences seJJing heavy duty portable in-dustrial pneumatic staplers and nailers or fasteners therefor , tothe extent that said company so requests , with fasteners suitablefor use in the Speedfast heavy duty protable industrial pneumaticstaplers and nailers listed in Appendix A , at a price of 50% ofthe list price published by Spotnails for such fasteners.

XIIIt is fu,.ther ordered That respondent shal1 provide the eligible

company with a current list of aJJ customers to whom its whoJJyowned subsidiary Spotnails , Inc. , is selling. This list shal1 containan appropriate designation of those customers who purchased insignificant volume.

XIV

It is further ordered That , for a period of one year from thedate of divestiture hereunder , respondent shaJJ cause Spotnails tofurnish at its cost to the eligible company such technical assist-ance as may be necessary to enable said company to commence toengage in the manufacture of the Speedfast heavy duty portable

industrial pneumatic nailers and staplers listed in Appendix Ahereto and of fasteners therefor. In the event that said companyelects under Paragraphs V and VI of this order to acquire a li-cense under Spotnails patents and know-how: And provided That



said company shal1 in fact engage in the manufacture of Spot-nails heavy duty portable industrial pneumatic staplers andnailers and fasteners therefor, respondent shaH cause Spotnailsfor a period of not more than one year from the date of such li-cense to furnish at its cost to said company such technical assist-ance as may be necessary to enable said company to commence toengage in the manufacture of Spotnails heavy duty portable in-

. dustrial pneumatic staplers and nailers and fasteners therefor.

It is rurther ordered That , upon the grant of licenses describedin Paragraph V of this order , and if requested by eligible com-pany in writing, respondent and its offcers , directors, agentsrepresentatives and employees shall, in writing (with a copy tosaid company), authorize its vendors to supply to the eligible com-pany, for a period of three years from the date of disposition ofthe assets , properties , rights and privileges ordered divested here-under , and upon terms and conditions comparable to those af-forded to Spotnails , the components which are made by such ven-dors to Spotnails ' specifications and which are used to assemblethe heavy duty portable industrial pneumatic nailers and staplerslisted in Appendix C hereto. In the event that , during said threeyear period , said vendors ' abiliy to supply any of such compo-nents shaH become impaired so that any of said vendors shaH be-come unable to supply suffcient quantities of any such compo-nents to satisfy the requirements of both Spotnails and eligiblecompany, the respondent shaH cause Spotnails to authorize anysuch vendor to divide its supply of such components hetweenSpotnails and the eligible company in a manner that reasonablyreflects the past purchases by each.

XVI

It is rurther ordered That respondent shaH cause Spotnails , if

eligible company requests , to notify employees of Spotnails thatsaid company is interested in hiring personnel , and, in addition

shali cause Spotnails to release any and aH Spotnails personnelwho desire to work for said company from their employment obli-gations and from any obligations and confidentiality relating toheavy duty portable industrial pneumatic staplers and nailers.saving any and al1 rights to confidentiality relating to any prod-ucts not subject to divestiture or license.

SWINGLINE INC. 427


XVII

It is fUTther ordered That for a period of ten (10) years fromthe date this Order becomes final , respondent shaU cease and de-sist from acquiring, directly or indirectly, through subsidiaries orotherwise , without the prior approval of the Federal Trade Com-mission , the whole or any part of the share capital or assets ofany concern, corporate or noncorporate, engaged in the produc-

tion, distribution or sale of portable industrial pneumatic sta-plers , nailers or tackers or fasteners therefor. For the purposesof this Paragraph , the definitions in the complaint shal1 apply.

XVIIIt is further OJ'deTed That respondent shall , within sixty (60)

days after the date of service of this order , and every ninety (90)days thereafter until respondent has fuUy complied with the pro-visions of this order, submit in writing to the Federal Trade

Commission a report setting forth in detail the manner and formin which respondent intends to comply, is complying, or has com-

plied with this order. AU compliance reports shaU include , amongother things that are from time to time required, a summary ofaU contacts and negotiations with persons relating to carryingout the provisions of this order , and copies of aU written commu-nications to and from such persons.

XIX

It is further ordered. That respondent shaD forthwith distrib-ute a copy of this order to each of its operating subsidiaries and

divisions.

APPENDIX A

SPEF.DF AST HEAVY DVTYPORTABLE INDI1STRIAL PXEUMATIC STAPLER

AND NAILF.R MODEL NUMBERS

1. StaplersModel 201

Model 201-

Model 231

Model 251

Model 271

Model 301

II. Nailen;Model 281 --

-----

Model 281- __nModel F-281-3 --------:\Iodel F -281-5 --

-------

Model 281-4 -----

Xailer;.ailer

Finishing NailerFinishing Nailer

Nailer


Initial Decision

II. Nailwi's cont.Model 281-2 -

-----------

!dodel 281-6 -

----

Model 290 ----

NailerNailer

T -Nailer

APPENDIX B

SPEEDFAST HEAVY DUTYPORTABLE PNEUMATIC STAPLER AND NAILER

PATENTS AND TRADE!dARKS

1. PatentsNo. Description

854 953 -

--__--

Fluid-actuated fastener-applyingmachine - _n__--_ Oct.

960,067 -

____

ingle stroke air hammer --

--____

Nov.037 207 -

---_ ___

Pneumatic nailer n--_

___

June106 134 ____nun_Fluid actuated hammer and nailer - Oct.252,641 -

----- ___

Safety device for fluid actuatedfastener driving machines ___--__May

Des. 191 802 -

-__ --__

Pneumatic power tool for applyingfasteners -

----

N av.

II. Trademarks

No. Description

646 770669, 504670, 188725 800726, 222761 301766 592776 455796 706

--- --______

Dcsign trademark -

--- ---____

JuneDesign trademark ---

____

Nov.

____

Design trademark --

--__--

Nov.

- - - - -----

" S peedfast" -

- - -- -- - - - -----

J an.

- -- ------ "

Speedfast" -----

-----

J an.

------ - "

Speed Fastener

" -

----- Dec.

------

Speed Fastener

" - --- -____

Mar.

--- --

" Speed" - - ---

- -

------ -- Sept.

-------

" Speed" - ----

- - --- ----

- Sept.

76 F.

Date of issue

7, 1958

15, 1960

, 1962

8, 1963

, 1966

21, 1961

Date of expiration

11, 1977

, 1978

25, 1978

, 1982

9, 1982

, 1983

17, 1984

8, 1984

28, 1985

The trademark "Speedfast" in the following foreign countries:Canada France Italy SpainFinland Holland Japan West Germany

APPENDIX C

SPOTNAILS HEAVY DUTYPORTABLE INDUSTRAL STAPLER AND

NAILER :vODELS1. Staplers

7400 Series --

----

7500 Series -7600 Series -3800 Series ----

2600 Series --------

1600 Series --_u_--1400 Series --------

, EAX, V, VL :Wodels, EAX, V, VL !odels, EAX , EAPX , EANX, EBX, V, VL Models

EA ModelsV Models

V Models

V Morlels

SWINGLINE INC.


APPENDIX C-CONTINUEDII. Nailers

EASEASXEATEATXEAFEAFXEBTEBF

Models -----

Models -----

Models -Models -Models -

----

Models -Models -Models -

400 Series, V, VL lVlodels600 Series, V, VL Models800 Series, VL Models

III. Pin Gun.-:

EAX -EA V -

------------

EAX -

150150300 , 400, 500 , 912, 1400

IV. Brad GunsE -- - 150

EAX - - 150

EA V ---- - 150

V. Corrugated Fastener Gun (Pre-Merger Spotnails Gun)V -

------

- 130 104

APPENDIX D

SPOT NAILS HEAVY DUTYPORTABLE INDUSTRIAL PNEUMATIC

STAPLER AND NAILER PATENTSAND PATENT ApPLICATIONS

T. PatentsNo. Dascriptif)7!

729,198 -

----____--

Pneumatic nailer _ _--n

--_

Jan.818,570 -

----_--_

Pneumatic stapler -- ____n_ Jan.837 743 - Feed mechanism for stapling

machines -

----

____n_June875 664 -- - Wing head fastener - _____n_ Mar.

880 480 _ _n__ - Sash pin with groove --

-----____

Apr.907 038 ----

___

Fastener driving machine -

--_

Oct.

928,094 -

------

-- Pneumatic stapling machine ------- Mar.928,142 -----______ Divergent chisel staple -

--------

- Mar.942,267 ------ - Corrugated fastener strip -

----____

June983 255 -

------

-- Machine with driving piston andmeans associated with the pistonfor absorbing shocks andvibrations -

------- ___--_

May994 879 _n___

___-

- Fastener driving device --

-__ ___

Aug.027,560 --- Dimpler mechanism for fastener

driving machines ---

____

Apr.

429

Date of issue

, 1956

, 1958

, 1958

, 1959

7. 1959

6, 1959

15, 1960

, 1960

, 1960

9, 1961

8, 1961

3, 1962


Final Ol'der

APPENDIX D TINUEDVa. IJescl"iptiQ11 Date of Issue

056,964 -

----

- Pneumatically operated fastenerdriving machine -- Oct.

056,965 --

---

---- Safety mechanism for pneumaticfastener driving machines -- Oct.

112 489 ._ Pneumatically operated drivingmachine for fasteners --

_--__

Dec.172 124 -

-----

-- Pneumatic nailer or stapler -

_----

Mar.232 511 -

-_--___

Pneumatically operated fastenerpositioning and drivingmachine -

---

Feb.234 572 --

_--

:Means for making brads --

---

Feb.255,674 _n_-- Pneumaiic fastener and like

driving machine -- June

9, 1962

9, 1962

, 1963

9, 1965

, 1966

15, 1966

, 1966

II. Patent ApplicatiunsSerial No. Filing date Subject 71wtter

729 113

457 924

--- ___--

May

----_ ___

May

29, 1967 -- Design patent on new roundheaded nailer.

, 1968-- Air return system for round

headed nailer., 1968-- Magazine , etc. for round headed

nailer., 1968_ Round headed nail assembly.1965--

_--

- Valve mechanism used in roundheaded nailer.

1968- --- Trapped air return system forround headed nailer.

1967 --_ Round headed nailer.

211 ,207 -

-__ --_

June

699,986 ---

____

Jan.

Not yet issued -- Oct.

731,364 -- May

695 538 - Dec.

FINAL ORDER

No appeal from the initial decision of the hearing examinerhaving been fied, and the Commission having determined thatthe case should not be placed on its own docket for review andthat pursuant to Section 3.51 of the Commission s Rules of Prac-tice (effective July 1 , 1967), the initial decision should be adoptedand issued as the decision of the Commission:

It is ordered That the initial decision of the hearing examiner, and it hereby is , adopted as the decision of the Commission.

It is furthe-I' ordend That the time within which respondent

shall begin submitting the compliance reports ordered in para-graph XVIII of the Order, as set forth in the initial decision

shall commence with the service of this order upon respondent.

CENTURY FABRICS, INC. , ET AL. 431

431 ComplaintIN THE MATTER OF

CE:\TURY FABRICS , INC. , ET AL

CONSENT ORDER , ETC. , IN REGARD TO THE ALLEGED VIOLATION

OF THE FEDERAL TRADE COMMISSION AND THE TEXTILE FIBERPRODUCTS IDENTIFICATION ACTS

Docket C-l.5lP2. Complaint , Oct. 10 , 196.C-Decision , Oct. 10, 196.

Consent order requiring a Chicago, Ill. , converter and jobber of drapery andupholstery fabrics, and an importer of Italian tapestry fabrics to cease

falsely advertising and misbranding its textile fiber products , and usingthe word " Looms" or any other word implying that it mils or manufac-tures the textiles it sells.

COMPLAINT

Pursuant to the provisions of the Federal Trade CommissionAct and the Textile Fiber Products Identification Act , and by vir-tue of the authority vested in it by said Acts , the Federal TradeCommission , having reason to believe that Century Fabrics , Inc.a corporation , doing business under its own name and as GrantLooms, hereinafter referred to as respondent, has violated theprovisions of the said Acts and the Rules and Regulations pro-mulgated under the Textile Fiber Products Identification Act, andit appearing to the Commission that a proceeding by it in respectthereof would be in the public interest, hereby issues its com-plaint stating its charges in that respect as fonows:PARAGRAPH 1. Respondent Century Fabrics , Inc. , is a corpora-

tion organized , existing and doing business under and by virtueof the laws of the State of I1inois with its offce and principal

place of business located at 345 West Chicago Avenue , ChicagoIllinois. Century Fabrics , Inc. , do€s business under its own nameand as Grant Looms.

Respondent Century Fabrics , Inc. , is a converter and jobber ofcut-orders of drapery and upholstery fabrics and also importstapestry fabrics from Italy.

PAR. 2. Respondent is now and for some time last past hasbeen , engaged in the introduction , delivery for introduction , sale,advertising, and offering for sale , in commerce , and in the impor-tation into the United States of textile fiber products; and hassold, offered for sale, advertised , delivered, transported andcaused to be transported , textile fiber products which have beenadvertised or offered for sale in commerce; and has soJd , offered


Complaint 76 F.

for sale, advertised, delivered , transported and caused to betransported, after shipment in commerce, textile fiber products,either in their original state or contained in other textile fiberproducts; as the terms "commerce" and "textile fiber product"are defined in the Textile Fiber Products Identification Act.

PAR. 3. Certain of said textile fiber products were misbrandedby respondent within the intent and meaning of Section 4 (a) ofthe Textile Fiber Products Identification Act and the Rules andRegulations promulgated thereunder , in that they were falselyand deceptively stamped , tagged , labeled , invoiced , advertised orotherwise identified as to the name or amount of the constituentfibers contained therein.

Among such misbranded textile fiber products but not limitedthereto, were textile fiber products , namely upholstery fabricswith labels which:

A. Set forth the generic name of a particular fiber in such amanner as to over emphasize the nylon content of the product, todetract from the required fiber content disclosure and to repre-sent or imply that the products were composed entirely of nylonwhen in truth and in fact the products contained fibers otherthan nylon.

B. Set forth the fiber content of textie fiber products composedin part of nylon , in such a manner as to imply that the productwas composed entirely of nylon when in truth and in fact suchproducts contained fibers other than nylon.

Also among such misbranded textile fiber products but not lim-ited thereto , were textie fiber products which were falsely anddeceptively advertised by means of price lists which used termssuch as "Nylon :vatelasse" and "Nylon Puff Matelasse " among

others but not limited thereto , in such a manner as to representor imply that the products were composed entirely of nylon whenin truth and in fact such products contained fibers other thannylon.

PAR. 4. Certain of such textile fiber products were further mis-branded by respondent in that they were not stamped , tagged , la-beled or otherwise identified as required under the provisions ofSection 4 (b) of the Textile Fiber Products Identification Act, andin the manner and form prescribed by the Rules and Regulationspromulgated under said Act.

Among such misbranded textile fiber products but not limitedthereto were drapery and upholstery fabrics with labels which

CENTURY FABRICS, INC., ET AL. 433

431 Complaint

failed to disclose: (1) the true generic names of the constituentfibers present in the product in the order of predominance byweight thereof; (2) the percentages of each fiber present, by

weight; (3) any fiber or group of fibers present in the amount ofJess than 5 per centum as "other fiber" or "other fibers: " and (4)the name or other identification issued and registered by theCommission of the manufacturer of the product or one or more

persons subject to Section 3 of said Act with respect to such

products.Also among such misbranded textile fiber products were certain

textie fiber products , namely drapery and upholstery fabrics soldby means of samples , swatches or specimens and unaccompaniedby an invoice or other paper showing the information required toappear on the label, which textiJe fiber products were notstamped , tagged , labeled or otherwise identified to disclose the in-formation required by Section 4 (b) of the Textile Fiber ProductsIdentification Act.

PAR. 5. Certain of said textiJe fiber products were misbrandedin violation of the TextiJe Fiber Products Identification Act inthat they were not labeled in accordance with the Rules and Reg-ulations promulgated thereunder in the following respects:

A. Non-required information was placed on labels in such amanner as to minimize , detract from and conflict with the re-quired information and in such a way as to be false or deceptiveas to fiber content, in violation of Rule 16 (c) of the aforesaid

Rules and Regulations.B. Fiber trademarks were placed on labels without the generic

names of fibers appearing on such labels in violation of Rule17 (a) of the afore"Said Rules and Regulations.

C. Generic names of fibers were used in non-required informa-tion on labels in such a manner as to be false , deceptive or mis-leading as to fiber content and to indicate , directly or indirectly,that such textile fiber products were composed wholly or in partof a particular fiber , when such was not the case , in violation ofRule 17 (d) of the aforesaid Rules and Regulations.

PAR. 6. Certain of said textile fiber products were falsely anddeceptively advertised in that respondent in making disclosuresor implications as to the fiber content of such textiJe fiber prod-ucts in written advertisements used to aid , promote or assist, di-rectly or indirectly, in the sale or offering for sale of said prod-

ucts faiJed to set forth the required information as to fiber


Complaint 76 F.

content as specified by Section 4 (C) of the Textile Fiber ProductsIdentification Act and in the manner and form prescribed by theRules and Regulations promulgated under said Act.

Among such textie fiber products , but not Jimited thereto , weredrapery, upholstery and slipcover fabrics which were falsely anddeceptively advertised by means of price lists , distributed by re-spondent throughout the United States in that the true generic

name of each fiber present in the products was not set forth.PAR. 7. By means of the aforesaid advertisements and others

of simiJar import and meaning not specifical1y referred to hereinrespondent falsely and deceptively advertised textiJe fiber prod-ucts in violation of the Textile Fiber Products Identification Actin that said textile fiber products were not advertised in accord-ance with the Rules and Regulations promulgated thereunder in

the following respects:

A. A fiber trademark was used in advertising textile fiberproducts without a full disclosure of the fiber content informationrequired by the said advertisement in violation of Rule 41 (a) ofthe aforesaid Rules and Regulations.

B. A fiber trademark was used in advertising textile fiberproducts containing more than one fiber and such fiber trademarkdid not appear in the required fiber content information in imme-diate proximity and conjunction with the generic name of thefiber in plainly legible type or lettering of equal size and conspic-uousness , in violation of Rule 41 (b) of the aforesaid Rules andRegulations.

C. A fiber trademark was used in advertising textile fiberproducts containing only one fiber and such fiber trademark didnot appear at least once in the said advertisement , in immediateproximity and conjunction with the generic name of the fiber inplainly legible and conspicuous type or lettering, in violation ofRule 41 (c) of the aforesaid Regulation.

D. The generic name of a fiber was used in advertising textilefiher products , namely upholstery fabrics , in such a manner as tobe false , deceptive or misleading as to fiber content and to indi-cate directly or indirectly that such textie fiber product was com-posed wholly or in part of such fiber when such was not the easein violation of Rule 41 (d) of the aforesaid Rules and Regulations.

E. In advertising textie fiber products in such a manner as torequire disclosure of the information required by the Act andRegulations , al1 parts of the required information were not stated

CENTURY FABRICS, INC. , ET AL. 435

431 Complaint

in immediate conjunction with each other in legible and conspicu-ous type or lettering of equal size and prominence , in violation ofRule 42 (a) of the aforesaid Rules and Regulations.

PAR. 8. The acts and practices of respondent as set forth above

were and are in violation of the Textile Fiber Products Identifi-cation Act and the Rules and Regulations promulgated thereun-

der and constitued and now constitute unfair methods of competi-

tion and unfair and deceptive acts or practices in commerceunder the Ferleral Trade Commission Act.

PAR. 9. Respondents are now and for some time last past havebeen engaged in the advertising, sale , offering for sale , and distri-bution of textile fiber products , including drapery and upholsteryfabrics, in commerce , as I(commerce" is defined in the FederalTrade Commission Act.

In the course and conduct of its business , respondent CenturyFabrics , Inc. , now and for some time last past has caused its saidproducts including drapery and upholstery fabrics , when sold , tobe shipped from its place of business in the State of Ilinois topurchasers thereof located in various other States of the United

States, and maintain , and at a11 times mentioned herein havemaintained a substantial course of trade in said products in com-merce as "commerce" is defined in the Federal Trade CommissionAct.

PAR. 10. In the conduct of its business , at a11 times mentionedherein , respondent Century Fabrics , Inc. , has been in substantialcompetition , in commerce with corporations , firms and individualsin the sale of products of the same general kind as that sold bythe respondent.

PAR. 11. In the course and conduct of its business , the afore-said respondent , Century Fabrics , Inc., on catalogues and price

lists , used the name "Grant Looms, " thus stating or implying thatrespondent operates a mi11 or factory in which such drapery andupholstery fabrics or other products sold by it are manufactured.

PAR. 12. In truth and in fact , respondent Century Fabrics , Inc.does not own , operate , or control any mi1 or factory where theaforesaid fabrics or other products sold by it are manufacturedbut is engaged solely in the business of conversion and distribu-tion of said fabrics or other products. Thus the aforesaid repre-sentation is false , misleading and deceptive.

PAR. 13. There is a preference on the part of many members ofthe public to buy products directly from mi1s or factories in the


Complaint 76 F.

belief that by so doing certain advantages accrue to them , inc1ud-ing lower prices.

PAR. 14. The use by respondent Century Fabrics , Inc. , of theaforesaid false , misleading and deceptive statements , representa-tions and practices has had and now has , the capacity and tend-ency to mislead purchasers into the erroneous and mistaken beliefthat said statements and representations are true and into the

purchase of substantial quantities of said respondent's products

by reason of said erroneous and mistaken belief.PAR. 15. The aforesaid acts and practices of respondent Cen-

tury Fabrics , Inc. , as herein alleged in Paragraphs Eleven

through Fourteen were and are , al1 to the prejudice and injury ofthe public and of respondent's competitors, and constituted , andnow constitute , unfair methods of competition and unfair and de-ceptive acts and practices in commerce in violation of Section5 (a) (1) of the Federal Trade Commission Act.

DECISION AND ORDER

The Federal Trade Commission having initiated an investiga-tion of certain acts and practices of the respondent named in thecaption hereof , and the respondent having been furnished there-after with a copy of a draft of complaint which the Bureau ofTextiles and Furs proposed to present to the Commission for itsconsideration and which, if issued by the Commission, wouldcharge respondent with violation of the Federal Trade Commis-sion Act and the Textile Fiber Products Identification Act; and

The respondent and counsel for the Commission having there-after executed an agreement containing a consent order , an ad-mission by the respondent of all the jurisdictional facts set forthin the aforesaid draft of complaint , a statement that the signingof said agreement is for settlement purposes only and does notconstitute an admission by respondent that the law has been vio-lated as al1eged in such complaint , and waivers and other provi-sions as required by the Commission s Rules; and

The Commission having thereafter considered the matter andhaving determined that it had reason to believe that the respond-ent has violated the said Act, and that complaint should issuestating its charges in that respect , and having thereupon acceptedthe executed consent agreement and placed such agreement on thepublic record for a period of thirty (30) days , now in further

CENTURY FABRICS, I:'C., ET AL. 437


conformity with the procedure prescribed in 34 (b) of its

Rules , the Commission hereby issues its complaint , makes the fol-lowing jurisdictional findings , and enters the foJ1owing order:

1. Respondent Century Fabrics , Inc., is a corporation orga-

nized , existing and doing business under and by virtue of thelaws of the State of Ilinois. Its offce and principal place of busi-

ness is located at 345 West Chicago Avenue, Chicago, Ilinois.This corporation does business under its own name and as GrantLooms.

2. The Federal Trade Commission has jurisdiction of the sub-ject matter of this proceeding and of the respondent . and the pro-ceeding is in the public interest.

ORDER

It is o1'de1'ed That respondent Century Fabrics. Inc., a corpora-tion , doing business under its own name and as Grant Looms , orany other name , and its offcers , representatives , agents and em-ployees , directly or through any corporate or other device, inconnection with the introduction, delivery for introduction, sale

advertising, or offering for sale , in commerce , or the transporta-tion or causing to be transported in commerce or the importationinto the United States of any textie fiber product; or in connec-

tion with the sale, offering for sale , advertising, delivery, trans-portation , or causing to be transported of any textiJe fiber prod-uct which has been advertised or offered for sale in commerce; orin connection with the sale, offering for sale, advertising,

delivery, transportation or causing to be transported , after ship-

ment in commerce, of any textile fiber product whether in itsoriginal state or contained in other textie fiber products as theterms "commerce" and "textiJe fiber product" are defined in theTextie Fiber Products Identification Act , do forthwith cease anddesist from:

A. Misbranding textile fiber products by:1. Falsely or deceptively stamping, tagging, labeling,

invoicing, advertising or otherwise identifying suchproducts as to the name or amount of the constituentfibers contained therein.

2. Failng to affx labels to such textiJe fiber productsshowing in a clear, legible and conspicuous manner eachelement of information required to be disclosed by Sec-



tion 4 (b) of the Textie Fiber Products IdentificationAct.

3. Placing non-required information on labels in sucha manner as to minimize , detract from or conflict withthe required information or to be false or deceptive as tofiber content.

4. Using a fiber trademark on labels affxed to textilefiber products without the generic name of the fiber 'ap-

pearing on the said labels.5. Using the generic names of fibers in non-required

information on any label in such a manner as to befalse, deceptive or misleading as to fiber content or toindicate .directly or indirectly that such textile fiberproducts are composed wholly or in part of a particularfiher when such is not the case.

B. Falsely and deceptively advertising textie fiber prod-ucts by :

1. Making any representations, by disclosure or byimplication , as to the fiber content of any textile fiberproduct in any written advertisement which is used toaid , promote or assist, directly or indirectly, in the saleor offering for sale of such textile fiber products unJessthe same information required to be shown on thestamp, tag, label or other means of identification underSection 4 (b) (1) and (2) of the Textile Fiber ProductsIdentification Act is contained in the said advertisementexcept that the percentages of the fibers present in thetextile fiber product need not be stated.

2. Using a fiber trademark in advertisements withouta full disclosure of required content information in atleast one instance in the said advertisement.

3. Using a fiber trademark in advertising textile fiberproducts containing more than one fiber without suchfiber trademark appearing in the required fiber contentinformation in immediate proximity and conjunctionwith the generic name of the fiber in plainly legible typeor lettering of equa1 size and conspicuousness.

4. Using a fiber trademark in advertising textile fiberproducts containing only one fiber without such fibertrademark appearing at least once in said advertisementin immediate proximity and conjunction with the ge-

CENTURY FABRICS, INC., ET AL. 439


neric name of the fiber, in plainly legible and conspicu-ous type.

5. Using the generic name of a fiber in advertisingtextile fiber products in such a manner as to be false , de-ceptive or misleading as to fiber content or to indicatedirectly or indirectly that such textile fiber products arecomposed wholly or in part of such fiber when such isnot the case.

6. Failing to set forth al1 parts of the required infor-

mation in advertisements of textile fiber products in im-mediate conjunction with each other in legible and con-spicuous type or lettering of equal size and prominence.

It is jurther ordered That respondent Century Fabrics , Inc. , acorporation, doing business under its O\vn name and as GrantLooms or any other name , and its offcers , representatives , agentsand employees directly or through any corporate or other devicein connection with the advertising, offering for sale , sale or dis-

tribution of fabrics or other products in commerce as " com-merce" is defined in the Federal Trade Commission Act , do forth-wi th cease and desist from:

1. Directly or indirectly using the word "Looms" or anyother word or term of similar import or meaning in or as apart of respondent's corporate or trade name or representingin any other manner that respondent performs the functionsof a mil or otherwise manufactures or processes the fabricsor other products sold by it unless and until respondentowns , operates , or directly and absolutely controls the milfactory or manufacturing plant wherein said fabrics or otherproducts are manufactured.

2. Misrepresenting in any manner that respondent hasmils , factories or manufacturing plants where its productsare manufactured.

It is jurther orde1"d That the respondent corporation shanforthwith distribute a copy of the order to each of its operating

divisions.It is jurther orde1' That the respondent herein shall , within

sixty (60) days after service upon it of this order , fie with theCommission a report in writing setting forth in detail the man-ner and form in which it has complied with this order.


Complaint 76 F.

IN THE MATTER OF

KASBAR QUILTING CORP., ET AL.

CONSENT ORDER , ETC. , IN REGARD TO THE ALLEGED VIOLATIONOF THE FEDERAL TRADE COMMISSION AND THE WOOL PRODUCTS

LABELING ACTS

Docket C-1593. Complaint , Oct. 10 , 1969-Decision , Oct. 10 , 1969

Consent order requiring a Brooklyn , N. , manufacturer of quilting interlin-ing fabrics to cease misbranding and falsely invoicing its wool products.

COMPLAINT

Pursuant to the provisions of the Federal Trade CommissionAct, and the Wool Products Labeling Act of 1939 , and by virtueof the authority vested in it by said Acts , the Federal Trade Com-mission, having reason to believe that Kasbar Quilting Corp., acorporation , and Joseph A. Kasbar and Adel Kasbar , individuallyand as offcers of said corporation , hereinafter referred to as re-spondents , have violated the provisions of said Acts and the Rulesand Regulations promulgated under the Wool Products LabelingAct of 1939 , and it appearing to the Commission that a proceed-ing by it in respect thereof would be in the public interest herebyissues its complaint stating its charges in that respect as follows:

PARAGRAPH 1. Respondent Kasbar Quilting Corp. is a corpora-tion organized , existing and doing business under and by virtueof the Jaws of the State of New York with its offce and principalplace of business located at 241-59th Street , Brooklyn , New York.

Individual respondents Joseph A. Kasbar and Adel Kasbar areoffcers of the corporate respondent. They formulate , direct andcontrol the policies , acts and practices of said corporation inc1ud-

ing the acts and practices hereinafter referred to. Their addressis the same as that of the corporate respondent.

Respondents are manufacturers of quilted interlining fabric.PAR. 2. Respondents , now and for some time last past , have

manufactured for introduction into commerce , introduced intocommerce, sold , transported , distributed , delivered for shipmentshipped and offered for sale in commerce , as "commerce" is de-fined in the Wool Products Labeling Act of 1939 , wool productsas wool product" is defined therein.

PAR. 3. Certain of said wool products were misbranded by re-spondents within the intent and meaning of Section 4(a) (1) of

KASBAR QUILTING CORP., ET AL. 441

440 Complaint

the Wool Products Labeling Act of 1939 and the Rules and Regu-lations promulgated thereunder in that they were falsely and de-ceptively stamped , tagged , labeled or otherwise identified with re-spect to the character and amount of the constituent fiberscontained therein.

Among such misbranded wool products but not limited theretowere quiled interlining materials which were stamped , taggedlabeled or otherwise identified by respondents as containing "90%Reprocessed Wool, 10% Other Unknown Reprocessed Fiberswhereas in truth and in fact said fabrics contained substantia11ydifferent fibers and amounts of fibers than as represented.

PAR. 4, Certain of said wool products were further misbrandedby respondents in that they were not stamped , tagged , labeled orotherwise identified as required under the provisions of Section4 (a) (2) of the Wool Products Labeling Act of 1939 and in themanner and form as prescribed by the Rules and Regulationspromulgated under said Act.

Among such misbranded wool products , but not limited thereto,was a wool product with a label on or affxed thereto which failedto disclose the percentage of the total fiber weight of the saidwool product , exclusive of ornamentation not exceeding 5 per cen-tum of the total fiber weight, of (1) wool; (2) reprocessed wool;(3) reused wool; (4) each fiber other than wool , when said per-centage by weight of such fiber was 5 per centum or more; and(6) the aggregate of a11 other fibers.

PAR. 6. The acts and practices of the respondents as set forthabove were and are in violation of the Wool Products LabelingAct of 1939 and the Rules and Regulations promulgated thereun-der , and constituted , and now constitute , unfair methods of com-petition and unfair and deceptive acts and practices, in com-merce, within the intent and meaning of the Federal TradeCommission Act.

PAR. 6. Respondents now and for some time last past have beenengaged in the advertising, offering for sale , sale and distributionof products iP commerce. The respondents now cause and forsome time last past have caused their said products , when sold , tobe shipped from their place of business in the State of New Yorkto purchasers located in various other States of the United

States, and maintain, and at a11 times mentioned herein havemaintained , a substantial course of trade in said products in com-


Complaint 76 F. T.

merce , as "commerce" is defined in the Federal Trade Commis-sion Act.

PAR. 7. Respondents in the course and conduct of their busi-ness , have made statements on invoices and shipping memorandato their customers misrepresenting the character or amount ofthe constituent fibers present in such products. Among such mis-representations but not limited thereto , were statements repre-senting certain quilted interlining fabric to be "90% ReprocessedWool, 10% Other Unknown Reprocessed Fibers" whereas, intruth and in fact the said product contained substantially differ-ent fibers and amounts of fibers than were represented.

PAR. 8. The acts and practices set out in Paragraph Seven havethe tendency and capacity to mislead and deceive the purchasers

of said products as to the true content thereof.PAR. 9. The acts and practices of respondents as herein alleged

were and are all to the prejudice and injury of the public , andconstituted , and now, constitute, unfair and deceptive acts and

practices in commerce , within the intent and meaning of the Fed-eral Trade Commission Act.

DECISION AND ORDER

The Federal Trade Commission having initiated an investiga-tion of certain acts and practices of the respondents named in thecaption hereof , and the respondents having been furnished there-after with a copy of a draft of complaint which the Bureau ofTextiles and Furs proposed to present to the Commission for itsconsideration and which , if issued by the Commission, wouldcharge respondents with violation of the Federal Trade Commis-sion Act and the Wool Products Labeling Act of 1939; and

The respondents and counsel for the Commission having there-

after executed an agreement containing a consent order, an ad-mission by the respondents of all the jurisdictional facts set forthin the aforesaid draft of complaint, a statement that the signingof said agreement is for settement purposes only and does not

constitute an admission by respondents that the law has been vio-

lated as alleged in such complaint , and waivers and other provi-sions as required by the Commission s Rules; and

The Commission having thereafter considered the matter andhaving determined that it had reason to believe that the respond-ents have violated the said Acts, and that complaint should issue

KASBAR QUILTING CORP., ET AL. 443


stating its charges in that respect , and having thereupon acceptedthe executed consent agreement and placed such agreement on thepublic record for a period of thirty (30) days , now in furtherconformity with the procedure prescribed in 34 (b) of its

Rules, the Commission hereby issues its complaint, makes thefollowing jurisdictional findings , and enters the fol1owing order:

1. Respondent Kasbar Quiling Corp. is a corporation orga-

nized , existing and doing business under and by virtue of thelaws of the State of New York , with its offce and principal placeof business located at 241.59th Street, Brooklyn , New York.

Respondents Joseph A. Kasbar and Adel Kasbar are offcers ofsaid corporation. They formulate, direct and control the policies

acts and practices of said corporation and their address is thesame as that of said corporation.


ORDER

It is ordered That respondents Kasbar Quilting Corp. , a corpo-ration, and its offcers , and Joseph A. Kasbar and Adel Kasbarindividual1y and as offcers of said corporation , and respondentsrepresentatives, agents and employees , directly or through anycorporate or other device , in connection with the introduction , ormanufacture for introduction , into commerce , or the offering forsale, sale , transportation , distribution , delivery for shipment orshipment, in commerce, of \vool products as "commerce" andwool product" are defined in the Wool Products Labeling Act of

1939 , do forthwith cease and desist from misbranding such prod-ucts by:

1. Falsely or deceptively stamping, tagging, labeling or

otherwise identifying such products as to the character or

amount of the constituent fibers contained therein.2. Failing to securely affx to or place on , each such prod-

uct a stamp, tag, label or other means of identification show-ing in a clear and conspicuous manner each element of infor-mation required to be disclosed by Section 4 (a) (2) of theWool Products Labeling Act of 1939.

It is further ordered That respondents Kasbar Quilting Corp.a corporation , and its offcers , and Joseph A. Kasbar and AdelKasbar, individually and as offcers of said corporation , and re-


Dccision and Order 76 F.

spondents ' representatives, agents and employees , directly orthrough any corporate or other device , in connection with the ad-vertising, offering for sale , sale or distribution of quiled interlin-ing materials or other products , in commerce, as ucommerce" is

defined in the Federal Trade Commission Act, do forthwith ceaseand desist from misrepresenting the character or amount of con-

stituent fibers contained in such pr9ducts on invoices or shippingmemoranda applicable thereto , or in any other manner.

It 'is fUTther ordered That the respondent corporation forth-with distribute a copy of this order to each of its operating divi-SlOns.

It is further ordered That the respondents herein shall , withinsixty (60) days after service upon them , of this order, tie withthe Commission a report in writing setting forth in detail themanner and form in which they have complied with this order.

IN THE MAT ER OF

SPORTPIPER OF MIAMI , INC. , ET AL.

CONSENT ORDER , ETC. , IN REGARD TO THE ALLEGED VIOLATIONOF THE FEDERAL TRADE COMMISSION AND THE TEXTILE FIBER

PRODGCTS IDE:-TIFICATION ACTS

Docket C-1594. Complaint, Oct. 10, 19G9-Decision , Oct. 10 , 1969

Consent order requiring a Miami, Fla. , clothing manufacturer to cease mis-branding its textile fiber products and failing to preserve requiredrecords.

COMPLAINT

Pursuant to the provisions of the Federal Trade CommissionAct and the Textile Fiber Products Identification Act and by vir-tue of the authority vested in it by said Acts , the Federal TradeCommission , having reason to believe that Sportpiper of MiamiInc. , a corporation , and Louis Goldleaf, individual1y and as an of-ficer of said corporation, hereinafter referred to as respondents

have violated the provisions of said Acts and the Rules and Regu-lations promulgated under the Textile Fiber Products Identifica-tion Act and it appearing to the Commission that a proceeding byit in respect thereof would be in the public interest, hereby issuesits complaint stating its charges in that respect as follows:

SPORTPIPER OF MIAMI, INC., ET AL. 445

444 Complaint

PARAGRAPH 1. Respondent Sportpiper of Miami , Inc. , is a cor-poration organized and existing under and by virtue of the lawsof the State of Florida. The said corporation is currently inactivebut has not been dissolved.

Respondent Louis Goldleaf is an offcer of said corporate re-spondent. He formulates , directs and controls the acts , practicesand policies of said corporate respondent.

Respondents were engaged in the manufacture and sale of tex-tile fiber products , including ladies ' dresses , with their offce and

principal place of business located previously at 2222 NW. FifthAvenue , Miami , Florida. The present address of Louis Goldleaf is1745 James Avenue , Miami Beach , Florida.

PAR. 2. Respondents for some time last past were engaged in

the introduction , delivery for introduction , manufacture for intro-duction , sale , advertising, and offering for sale , in commerce , andin the transportation or causing to be transported in commerce,and in the importation into the United States , of textile fiber

products; and have sold, offered for sale, advertised, delivered,

transported and caused to be transported, textie fiber products

which had been advertised or offered for sale in commerce; andhave sold , offered for sale , advertised , delivered , transported andcaused to be transported, after shipment in commerce, textiefiber products , either in their original state or contained in othertextile fiber products; as the terms "commerce" and "textile fiberproduct" are defined in the Textile Fiber Products IdentificationAct.

PAR. 3. Certain of said textile fiber products were misbrandedby respondents within the intent and meaning of Section 4 (a) ofthe Textile Fiber Products Identification Act and the Rules andRegulations promulgated thereunder in that they were falselyand deceptively stamped , tagged , labeled , invoiced , advertised , orotherwise identified as to the names and amounts of the constitu-ent fibers contained therein.

Among such misbranded textile fiber products, but not limitedthereto, were ladies ' dresses labeled as " 100% Rayon" whereasin truth and in fact , such products contained substantial1y differ-ent amount of fibers other than as represented.

PAR. 4. Certain of the textile fiber products were misbrandedby respondents in that they were not stamped , tagged , labeled , orotherwise identified to show each element of information requiredto be disclosed by Section 4 (b) of the Textile Fiber Products

446 FEDERAL TRADE COM:VIISSION DECISIONS

Complaint 76 F.

Identification Act , and in the manner and form prescribed hy theRules and Regulations promulgated under said Act.

Among such misbranded textile fiber products , but not limitedthereto , were ladies ' dresses which failed to disclose the true ge-neric names of the fibers present.

PAR. 5. Respondents have failed to maintain proper records

showing the fiber content of the textile fiber products manufac-tured by them , in violation of Section 6 of the Textile Fiber Prod-ucts Identification Act and Rule 39 of the Regulations promul-gated thereunder.

PAR. 6. The acts and practices of respondents, as set forth

above in Paragraphs Three , Four and Five were , and are in vio-lation of the Textile Fiber Products Identification Act and theRules and Regulations promulgated thereunder, and constituted

and now constitute, unfair methods of competition and unfair

and deceptive acts and practices in commerce , under the FederalTrade Commission Act.

DECISION AND ORDER

The Federal Trade Commission having initiated an investiga-tion of certain acts and practices of the respondents named in thecaption hereof , and the respondents having been furnished there-after with a copy of a draft of complaint which the Bureau ofTextiles and Furs proposed to present to the Commission for itsconsideration and which, if issued by the Commission, wouldcharge respondents with violation of the Federal Trade Commis-sion Act and the Textile Fiber Products IdentifICation Act , and

The respondents and counsel for the Commission having there-after executed an agreement containing a consent order , an ad-mission by the respondents of al1 the jurisdictional facts set forthin the aforesaid draft of complaint , a statement that thc signingof said agreement is for settlement purposes only and does notconstitute an admission by respondents that the law has been vio-lated as al1eg-ed in such complaint , and waivers and other provi-sions as required by the Commission s Rules; and

The Commission having thereafter considered the matter andhaving determined that it had reason to believe that the respond-ents have violated the said Acts, and that complaint should issue

stating its charges in that respect , and having thereupon acceptedthe executed consent agreement and placed such agreement on the

SPORT PIPER OF MIAMI, INC., ET AL. 447


public record for a period of thirty (30) days , now in furtherconformity with the procedure prescribed in S 2. 34 (b) of itsRules , the Commission hereby issues its complaint , makes the fol-lowing jurisdictional finding-s , and enters the fol1owing order:

1. Respondent Sportpiper of Miami , Inc. , is a corporation orga-nized , existing and doing- business under and by virtue of thelaws of the State of Florida. The said corporation is currently in-active but has not been dissolved.

Respondent Louis Goldleaf is an offcer of said corporation andhis address is 1745 James A venue , Miami Beach , Florida.

2. The Federal Trade Commission has jurisdiction of the sub-ject matter of this proceeding- and of the respondents , and theproceeding is in the pubJic interest.

ORDER

It is 01'deTed That respondents Sportpiper of Miami , Inc. , acorporation , and its offcers , and Louis Goldleaf , individually andas an offcer of said corporation, and respondents' representa-

tives , agents and employees , directly or throug-h any corporate orother device , in connection with the introduction , delivery for in-troduction , manufacture for introduction , sale , advertising, or of-fering for sale , in commerce, or the transportation or causing tobe transported in commerce, or the importation into the United

States , of any textile fiber product; or in connection with the sale,offering for sale , advertising, delivery, transportation , or causingto be transported , of any textile fiber product which has been ad-vertised or offered for sale in commerce, or in connection withthe sale , offering for sale , advertising, delivery, transportation orcausing- to be transported , after shipment in commerce, of anytextile fiber product , whether in its original state or contained inother textile fiber products , as the terms "commerce" and " textilefiber product" are defined in the Textile Fiber Products Identifi-cation Act, do forthwith cease and desist from:

A. Misbranding textile fiber products by:1. Falsely or deceptively stamping, tagg-ing, labeling-,

invoicing, advertising, or othen;\lise identifying suchproducts as to the name or amount of constituent fiberscontained therein.

2. Failing to affx a stamp, tag, label or other meansof identification to each such product showing in a clear


Dccision and Order 76 F.

legible and conspicuous manner each element of infor-mation required to be disclosed by Section 4 (b) of theTextiJe Fiber Products Identification Act.

B. Failing to maintain and preserve proper records show-

ing the fiber content of the textie fiber products manufac-tured by said respondents , as required by Section 6 of tl1eTextile Fiber Products Identification Act and Rule 39 of theRegulations promulgated thereunder.

It is further ordered That the respondent corporation shal1forthwith distribute a copy of this order to each of its operating

divjsions.It is further ordered That the respondents herein shall , within

sixty (60) days after service upon them of this order, file withthe Commission a report in writing setting forth in detail the

manner and form in which they have complied with this order.

IN THE MATTER OF

MUTUAL CREDIT BUREAU , INC. , ET AL.

COI\SENT ORDER, ETC. , IN REGARD TO THE ALLEGED VIOLATION OF THEFEDERAL TRADE COMMISSION ACT

Docket C-1595. COTlplaint , Oct. 10 , 1969-Decision , Oct. 10 , 1969

Consent order requiring a Cleveland, Ohio , debt collection agency to ceaseusing the term " Credit Burea " in its corporate name , misrepresentingthat it operates a special audit division, using deceptive fee schedules

falsely guaranteeing its services, using deceptive form letters to obtaininformation on alleged debtors , misrepresenting the size and geographi-cal extent of its business , and threatening legal action against allegedlydelinquent debtors.

COMPLAIN1'

Pursuant to the provisions of the Federal Trade CommissionAct , and by virtue of the authority vested in it by said Act , theFederal Trade Commission , having reason to believe that MutualCredit Brueau , Inc. , a corporation , and Kenneth G. Kirchenbauerand Albert Di?l1arco , individually and as offcers and directors ofsaid corporation , hereinafter referred to as respondents , have vio-lated the provisions of said Act, and it appearing to the Commis-sion that a proceeding hy it in respect thereof would be in the

MUTUAL CREDIT BUREAU, INC., ET AL. 449

448 Complaint

pubJic interest, hereby issues its complaint stating its charges inthat respect as follows:

PARAGRAPH 1. Mutual Credit Bureau , Inc. , is a corporation or-ganized , existing and doing business under and by virtue of thelaws of the State of Ohio , with its principal offce and place of

husiness located at 2800 EucJid A venue, in the city of Cleveland

State of Ohio.

Respondents Kenneth G. Kirchenbauer and Albert DiMarco areindividuals and are offcers and directors of the corporate re-spondent. They formulate , direct and control the acts and prac-tices of the corporate respondent, including the acts and prac-

tices of the corporate respondent, including the acts and practiceshereinafter set forth. Their address is the same as that of thecorporate respondent.

PAR. 2. Respondents are now and for some time last past havebeen engaged in the business of operating a collection agencyunder the name of Mutual Credit Bureau , Inc.

Respondents solicit and reccive accounts for collection frombusiness , professional and other people h cated in Ohio and inother States. In carrying out their aforesaid collection businessrespondents have engaged, and are now engaged, in extensivecommercial intercourse in commerce among and between the var-ious States of the United States , including the transmission andreceipt of monies , checks , collection letters , forms , contracts andother written instruments.

In carrying out their aforesaid collection business , respondentsmaintain, and at al1 times mentioned herein have maintained, a

substantial course of trade in commerce , as "commerce" is definedin the Federal Trade Commission Act.

PAR. 3. In the course and conduct of their business , and at alltimes mentioned herein , respondents have been in substantialcompetition , in commerce , with other corporations , firms , and in-dividuals engaged in the business of collecting al1eged delinquentaccounts.

PAR. 4. Through the use of the words "Credit Bureau" as part

of their corporate name , separately and in conjunction with otherstatements and representations said respondents represented , andnow represent , directly or by implication , that the corporate re-

spondent is engaged in gathering, recording and disseminating fa-vorable as well as unfavorable information relative to the creditworthiness , financial responsibiJity, paying habits and characterof individuals, firms, corporations , and any other legal entity

450 FEDBRAL TRADB COMMISSION DECISIONS

Complaint 76 F.

being considered for credit extension , so that a prospective credi-tor may be able to make a sound decision in the extension ofcredit.

PAR. 5. In truth and in fact, the corporate respondent is not

engaged in gathering, recording and disseminating favorable in-formation relative to the credit worthiness , financial responsibil-ity, paying habits and character of individuals, firms, corpora-

tions and any other legal entity being considered for creditextension. In a limited number of instances , respondents may fur-nish a client upon request, unfavorable credit information aboutan al1eged debtor when such information is contained in respond-ents' files, or will verify information furnished a client by acredit applicant when such information is contained in respond-ents ' files.

Therefore , the statements and representations set forth in Par-agraph Four hereof were and are false , misleading and deceptive.

PAR. 6. Respondents , in the course and conduct of their afore-said business, and for the purpose of inducing individuals , firmsand corporations to assign accounts to the respondents for collec-tion , as well as in aiding in making col1ections from alleged debt-ors , have made certain statements and representations , directly orby implication , with respect to their business methods , fees , andthe size and extent of their business.

Typical and illustrative , but not al1 inclusive of such statementsand representations , are the following:

1. Professional Audit System , and Professional Audit System , Division ofMutual Credit Bureau , Inc.

2. Complete Credit and Collection Service.3. No Collection-No Charge , and o Collection-No Fee.4. The Professional Audit System is Guaranteed.5. Associate Offces Everywhere , and our associate.PAR. 7. By and through the use of the aforesaid statements and

representations set forth in Paragraph Six hereof , and others ofsimilar import or meaning, but not expressly set out herein , re-spondents represented , and now represent, directly or by implica-tion , that:

1. Respondents audit accounts of creditors to determine if saidaccounts are in arrears.

2. The business of respondents has a separate "ProfessionalAudit System" department; and they have a specially staffed , es-tablished and operated auditing division.

3. Respondents offer and perform all types of credit and collec-tion services for clients or prospective clients.


448 Complaint

4. Respondents make no charges or fees on any account theydo not collect on behalf of their client.

5. Respondents "Professional Audit System" is guaranteedwithout qualification or limitation.

6. The business of respondents is nationwide in scope by being

affliated , associated or in some manner connected with collectionagencies over the entire United States.


1. Respondents do not in a substantial number of instances

audit accounts of creditors to determine if said accounts are inarrears.

2. The "Professional Audit System" is not a separate division

of respondents ' business , specially staffed , established and oper-ated to audit accounts of creditors. On the contrary, the "Profes-sional Audit System" is merely a precollection service which re-

spondents sell to creditors to enable creditors to protect theirgoodwill while collecting or attempting to collect al1eged delin-quent accounts and involves the sending of form letters to allegeddebtors by respondents requesting that payment be made directlyto the creditor.

3. Respondents do not offer and perform al1 types of credit re-porting and col1ection services; but, with minor additions, per-form only routine col1ection functions.

4. Respondents do make charges on accounts they do not col1ectin instances where respondents utilize interest monies col1ected onsome accounts to help defray the cost of attempting to col1ect un-col1ectable accounts , and respondents charge fifty percent (50%)as a fee on accounts forwarded to other col1ection agencies or at-torneys. The said additional amounts are not set forth in fee

schedules used by respondents.

5. Respondents "Professional Audit System" is not guaranteedwithout qualification or limitation , and the nature , extent , ident-ity, and the manner in which respondents wil perform is notclearly and conspicuously disclosed in immediate connection withthe term "Guaranteed.

6. The business of respondents is not nationwide in scope and

is not affliated , associated or in any manner connected withcollection agencies throughout thc entire United States , but, onthc contrary, respondents, through the purchase and USe of a

directory of collection agencies and attorneys , merely forward ac-counts out of State to col1ection agencies and attorneys listed in

said directory.


Complaint 76 F.

Therefore , the statements and representations set forth in Par-agraphs Six and Seven hereof were, and are, false , misleadingand deceptive.

PAR. 9. In the course and conduct of their collection businessand for the purpose of inducing the payment of alleged delin-quent accounts , respondents transmit and mail , and cause to betransmitted and mailed , to alleged delinquent debtors, and to

third parties , various form letters, demands for payment, re-quests for information , and other printed material.

Typical and ilustrative of respondents ' forms , but not all inclu-sive thereof , are the following:

1. The above account is due and payable. We have full authority to makecollection in any fashion that is allowable by the laws of the state.

2. Be advised. Our client has instructed this offce to refer the matter toan attorney on with instructions to start immediate legalproceedings and take any action necessary io enforce collection if paymentin full is not received by

a. L nless we receive your check or money order for $ - we are going to recommend our client return the matter

to his attorney to institute other proceedings to enforce collection.

4. Prior to forwarding this account to our representative in your city for

legal action , we are drawing on your account in the amount stated above.It is suggested that if you wish to avoid presentment of this draft to your

bank , you wire us to the effect that payment is being forwarded at once.5. Mr./Mrs. --

- - -

has applied for credit with one of ourmembers and gave your name as a reference.

6. \ lould you kindly furnish us with information on the employee listedbelow.

PAR. 10. By and through the use of the aforesaid forms andthe statements and representations set forth in Paragraph Ninehereof and others of similar import and meaning, but not ex-pressly set out herein , respondents represented , and now repre-sent , directly or by implication , that:

1. Respondents have been given authority by the creditor to in-itiate legal action to collect an alleged dclinquent account.

2. Respondents have been instrucied by the creditor to referthe alleged delinquent account to an aitorney in order to institutelegal proceedings to enforce collection of said account unless thealleged debtor pays in full by a certain , specified date.

3. Unless payment is received by respondents from an allegeddebtor by a certain , specified date , respondents will recommend tothe creditor that the creditor refer the alleged delinquent accountto his aitorney to institute legal proceedings to enforce collection.


448 Complaint

4. Respondents wi1 forward a sight draft to the alJeged debt-s bank and that respondents wi1 draw on the alJeged debtor

bank account to effect payment of the alJeged delinquent account.5. An alJeged debtor has applied for credit and gave the name

of the recipient of the form as a reference.6. Respondents are requesting certain information from an al-

leged debtor s employer or former employer to determine his em-ployment status and address.


1. Respondents have not been given authority by the creditorto initiate legal action to enforce the col1ection of an alJeged debt

at the time they mail form letters which represent they do havesuch authority.

2. Respondents , at the time they send a form letter statingthey have been so instructed , have not been instructed by a credi-tor to refer an alJeged delinquent account to an attorney in orderto institute legal proceedings to enforce colJection of an account ifan alJeged debtor fails to pay the account by a certain specifieddate.

3. In many instances respondents do not recommend to thecreditor that he refer an alJeged delinquent account to an attor-

ney to institute legal proceedings to enforce colJection of said ac-count if the alJeged debtor fails to pay the account by a certainspecified date.

4. Respondents do not forward a sight draft to the bank of al1eged debtor and draw against an alJeged debtor s bank accountto effect payment of an al1eged delinquent account.

5. In instances where respondents mail a form letter to a thirdparty which represents that an alJeged debtor has applied for

credit and has given the third party s name as a reference , the al-leged debtor has not applied for credit and thus has not given thethird party s name as a reference. On the contrary, respondents

use said form to obtain information about the alJeged debtor

without revealing that the purpose of the inquiry is to assist re-spondents in the colJection of an al1eged delinquent account.

6. In instances when respondents mail a form to thc employeror former employer of an al1eged debtor requesting information

about the alJeged debtor, respondents do not reveal that the truepurpose of the inquiry and the obtaining of information sought

therein is to assist respondents in the colJection of an alJeged de-linquent account.


Complaint 76 F.

Therefore , the statements and representations set forth in Par-agraphs Nine and Ten hereof were , and are , false , misleading anddecepti ve.

PAR. 12. The use by respondents of the aforesaid false , mis-leading and deceptive statements, representations and practices

has had, and now has , the capacity and tendency to mislead mem-bers of the public, including a1leged debtors , prospective clientsand clients (creditors), into the erroneous and mistaken beliefthat said statements and representations were and are true andinto the purchase of respondents ' services by creditors and thepayment of accounts by a1leged debtors , by reason of such erro-neous and mistaken belief.

PAR. 13. The aforesaid acts and practices of respondents, as

herein a1leged , were and are a1l to the prejudice and injury of thepublic and of respondents ' competitors and constituted , and nowconstitute , unfair methods of competition in commerce and unfairand deceptive acts and practices in commerce in violation of Sec-tion 5 of the Federal Trade Commission Act.

DECISION AND ORDER

The Federal Trade Commission having initiated an investiga-tion of certain acts and practices of the respondents named in thecaption hereof, and the respondents having been furnished there-after with a copy of a draft of complaint which the Bureau ofDeceptive Practices proposed to present to the Commission for itsconsideration and which, if issued by the Commission, wouldcharge respondents with violation of the Fedcral Trade Commis-sion Act; and

The respondents and counsel for the Commission having there-after executed an agreement containing a consent order , an ad-mission by the respondents of al1 the jurisdictional facts set forthin the aforesaid draft of complaint , a statement that the signingof said agreement is for settlement purposes only and does notconstitute an admission by respondents that the law has been vio-lated as a1leged in such complaint , and waivers and other provi-sions as required by the Commission s Rules; and

The Commission having thereafter considered the matter andhaving determined that it had reason to believe that the respond-ents have violated the said Act, and that complaint should issuestating its charges in that respect , and having thereupon acceptedthe executed consent agreement and placed such agreement on the



public record for a period of thirty (30) days , now in furtherconformity with the procedure prescribed in 34 (b) of its

Rules , the Commission hereby issues its complaint, makes the fol-lowing jurisdictional findings , and enters the following order:

1. Respondent Mutual Credit Bureau , Inc. , is a corporation or-ganized , existing and doing business under and by virtue of thelaws of the State of Ohio, with its offce and principal place of

business located at 2800 Euclid A venue, city of Cleveland , State

of Ohio.

Respondents Kenneth G. Kirchenbauer and Albert DiMarco areoffcers and directors of said corporation and their principal offceand place of business is located at the above stated address.


ORDER

It is ordered That respondents Mutual Credit Bureau , Inc. , a

corporation , and its offcers , and Kenneth G. Kirchenbauer andAlbert DiMarco , individual1y and as offcers and directors of saidcorporation , and respondents ' agents , representatives and employ-ees , directly or through any corporate or other device , in connec-

tion with the collection of accounts or attempts to collect accounts

or the advertising, offering for sale , sale or distribution of anyservice in connection with or printed matter in connection withthe collection of accounts , attempts to col1ect accounts , the solici-tation of accounts for collection or contracts therefor, in com-merce, as Hcommerce " is defined in the Federal trade CommissionAct , do forthwith cease and desist from:

1. Using the term "Credit Bureau," or any other words orterms of similar import or meaning, in respondents ' corporateor trade name , or representing, in any manner , that respond-ents are a credit bureau or performing the functions of acredit bureau , unless respondents regularly engage in gather-ing, recording and disseminating favorable as wen as unfa-vorable information relative to the credit worthiness , finan-cial responsibility, paying habits and character ofindividuals , firms , corporations, or any other legal entitybeing considered for credit extension so that a prospective

creditor may be able to make a sound decision in the exten-sion of credit.

456 FEDERAL TRADE COMMISSIOJ\ DECISIONS


2. Using the term "Professional Audit System" or any

other words or terms of similar import or meaning in de-

scribing or referring to respondents ' pre-col1ection service.3. Representing, directly or by implication , that respond-

ents have an Audit Division which is specially staffed , estab-lished and operated to audit accounts of creditors, orrepresenting that respondents have any other division or or-ganizational unit specially staffed , established and operatedto perform any other functions in connection with respond-ents ' business , unless in every instance , respondents do havesuch divisions or organizational units which are speciallystaffed , established and operated to audit such accounts orperform other functions in connection with the operation ofrespondents ' business.

4. Representing, directly or by implication, that respond-

ents offer a complete credit and col1ection service , or misrep-resenting, in any manner , the nature or extent of credit andcollection services offered by respondents.

5. Representing, directly or by implication, that no

charges or fees will be made on any accounts not collected un-less in' every instance respondents do not assess a charge orfee of any kind and in any manner whatsoever.

6. Using fee schedules which do not clearly and conspicu-

ously disclose thereon all possible fees , charges and rates re-spondents can assess for the collection of accounts, or mis-representing, in any manner, the fees and charges assessedby respondents.

7. Representing, directly or by implication , that any of re-spondents' services or systems are guaranteed withoutclearly and conspicuously disclosing in immediate connectiontherewith , the nature and extent of the guarantee , the man-ner in which the guarantor will perform , and the identity ofthe guarantor.


ents ' business is nationwide in scope, or misrepresenting, inany manner , the extent, size or services of respondents.


ents have been instructed or given the authority to initiatelegal action , or will recommend to the creditor the institutionof legal proceedings to enforce col1ection of an al1eged delin-

quent account if the al1eged debtor fails to pay said accountor fails to respond to requests for payment or cooperation



unless in every instance , respondents have been instructed orgiven authority to initiate legal action , and do recommend tothe creditor the institution of legal action to enforce col1ec-tion of an al1eged delinquent account.

10. Representing, directly or by implication , that respond-ents wi1 send a sight draft to an alJeged debtor s bank.

11. Using any form, questionnaire or other material

printed or written , which does not c1early and conspicuouslyreveal that the purpose for which the information is re-quested is that of obtaining information concerning al1eged

debtors or for the collection of, or the attempt to colJect , al-leged delinquent accounts.

It is further o,'de,' That the respondent corporation shalJforthwith distribute a copy of this order to each of its operatingdivisions.

It is further ordered That the respondents herein shalJ , withinsixty (60) days after service upon them of this order , file withthe Commission a report, in writing, setting forth in detail themanner and form in which they have complied with this order.

IN THE MATTER OF

UNITED MANUFACTURING CO. , ET AL.

CONSENT ORDER , ETC. , IK REGARD TO THE ALLEGED VIOLATION

OF THE FEDERAL TRADE COMMISSION AND THE WOOL PRODUCTS

LABELING ACTS

Docket C-1596. Complaint, Oct. 10, 1969-Decision , Oct. 10, 1969

Consent order requiring a Marlboro , Mass. , manufacturer of men s and boys

wearing apparel to cease misbranding its wool products.

COMPLAINT

Pursuant to the provisions of the Federal Trade CommissionAct and the Wool Products Labeling Act of 1939 , and by virtueof the authority vested in it by said Acts , the Federal Trade Com-mission , having reason to believe that United Manufacturing Co.a partnership, and Lewis B. Freedman and Jackson D. Seifer , in-dividualJy and as copartners trading as United ManufacturingCo. , hereinafter referred to as respondents , have violated the pro-


Complaint 76 F.

visions of said Acts and the Rules and Regulations promulgatedunder the Wool Products Labeling Act of 1939 , and it appearingto the Commission that a proceeding by it in respect thereofwould be in the public interest, hereby issues its complaint stat-ing its charges in that respect as follows:

PARAGRAPH 1. Respondent United Manufacturing Co. is a part-nership. The said partnership is organized , exists and does busi-ness in the State of Massachusetts with its offce and principal

place of business located at 36 Hudson Street , Marlboro , Massa-chusetts.

Individual respondents Lewis B. Freedman and Jackson D. Sei-fer are copartners in said partnership. They formulate, direct

and control the acts , practices and pOlicies of said partnership.Their offce and principal place of business is the same as that ofthe partnership.

Respondents are engaged in the manufacturing of men s andboys ' apparel.

PAR. 2. Respondents , now and for some time last past, havemanufactured for introduction into commerce, introduced into

commerce , sold , transported , distributed , delivered for shipmentshipped , and offered for sale , in commerce , as "commerce" is de-

fined in said Wool Products Labeling Act of 1939 , wool productsas " wool product" is defined therein.

PAR. 3. Certain of said wool products were misbranded by re-spondents within the intent and meaning of Section 4 (a) (1) ofthe Wool Products Labeling Act of 1939 and the Rules and Regu-

lations promulgated thereunder, in that they were falsely and de-ceptively stamped , tagged , labeled or otherwise identified with re-spect to the character and amount of the constituent fiberscontained therein.

Among such misbranded wool products but not limited theretowere certain athletic jackets which were stamped , tagged , labeledor otherwise identified by respondents as containing " Outer Shel190% Reprocessed Wool , 10% Other Fibers" whereas in truth andin fact said athletic jackets contained substantial1y differentfibers and amounts of fibers than as represented.

PAR. 4. Certain of said wool products were further misbrandedby respondents in that they were not stamped , tagged , labeled orotherwise identified as required under the provisions of Section

4 (a) (2) of the Wool Products Labeling Act of 1939 and in themanner and form as prescribed by the Rules and Regulationspromulgated under said Act.

UNITED MANVFACTURING CO., ET AL. 459

457 Complaint

Among such misbranded wool products , but not limited theretowere wool products , namely men s and boys ' jackets , with labels

on or affxed thereto , which failed to disclose the percentage oftotal fiber weight of said wool products , exclusive of ornamenta-tion , not exceeding 5 per centum of said total fiber weight, of (1)wool, (2) reprocessed wool, (3) reused wool , (4) each fiber otherthan wool when said percentage by weight of such fiber was 5 percentum or more; and (5) the aggregate of aU other fibers.

Also among such misbranded wool products, but not limitedthereto , were wool products without labels.

PAR. 5. The acts and practices of the respondents as set forthabove were , and are , in violation of the Wool Products LabelingAct of 1939 and the Rules and Regulations promulgated there-under, and constituted , and now constitute, unfair methods of

competition and unfair and deceptive acts and practices in com-merce , within the intent and meaning of the Federal Trade Com-mission Act.

DECISION AND ORDER

The Federal Trade Commission having initiated an investiga-tion of certain acts and practices of the respondents named in thecaption hereof , and the respondents having been furnished there-after with a copy of a draft of complaint which the Bureau ofTextiles and Furs proposed to present to the Commission for itsconsideration and which, if issued by the Commission, wouldcharge respondents with violation of the Federal Trade Commis-sion Act and the Wool Products Labeling Act of 1939; and

The respondents and counsel for the Commission having there-

after executed an agreement containing a consent order , an ad-mission by the respondents of all the jurisdictional facts set forthin the aforesaid draft of complaint , a statement that the signingof said agreement is for settement purposes only and does not

constitute an admission by respondents that the law has been vio-lated as al1eged in such complaint , and waivers and other provi-sions as required by the Commission s Rules; and

The Commission having thereafter considered the matter andhaving determined that it had reason to believe that the respond-ents have violated the said Acts , and that complaint should issue

stating its charges in that respect , and having thereupon acceptedthe executed consent agreement and placed such agreement on thepublic record for a period of thirty (30) days, now in further



conformity with the procedure prescribed in 9 2.34 (b) of itsRules , the Commission hereby issues its complaint , makes the fol-lowing jurisdictional findings , and enters the folJowing order:

1. Respondent United Manufacturing Co. is a partnership. Thesaid partnership is organized , exists and does business in theState of Massachusetts. Said firm is located at 36 Hudson StreetMarlboro , Massachusetts.

Respondents Lewis B . Freedman and Jackson D. Seifer are co-partners in said partnership.


ORDER

It is ordered That respondents United Manufacturing Co. a

partnership, and Lewis B. Freedman and Jackson D. Seifer , indi-vidualJy and as copartners doing business as United Manufactur-ing Co. , or under any other name, and respondents ' representa-tives , agents and employees , directly or through any corporate orother device , in connection with the introduction , or manufacturefor introduction, into commerce, or the offering for sale, sale

transportation , distribution , delivery for shipment or shipment incommerce , of fabrics or other wool products , as "commerce" andwool product" are defined in the Wool Products LabeJing Act of

1939 , do forthwith cease and desist from misbranding such prod.ucts by :

1. Falsely or deceptively stamping, tagging, labeling or

otherwise identifying such products as to the character or

amount of the constituent fibers contained therein.2. FaiJing to securely affx to or placed on each such prod-

uct a stamp, tag, label or other means of identification show-ing in a clear and conspicuous manner each element of infor-mation required to be disclosed by Section 4 (a) (2) of theWool Products Labeling Act of 1939.

It is further ordered That the respondents herein shal1 , withinsixty (60) days after service upon them of this order , file withthe Commission a report in writing settng forth in detail the

manner and form in which they have complied with this order.

AKRON ARTIFICIAL FLOWERS AND SUPPLIES 461

101 Complaint

IN THE MATTER OF

MRS. MARY BLACK TRADING AS AKRON ARTIFICIALFLOWERS AND SUPPLIES

CONSENT ORDER , ETC., IN REGARD TO THE ALLEGED VIOLATIONOF THE FEDERAL TRADE COMMISSION AND THE FLAMMABLE

FABRiCS ACTS

Docket C-1,597. Complaint , Oct. 10, 1960-Decision , Oct. 10 , 1969

Consent order requiring an Akron , Ohio , seller of various consumer goods tocease distributing fabric items which fail to conform to the standardsissued under the Flammable Fabrics Act , and to file a special report onthe disposition of her stock of such items.

COMPLAiNT

Pursuant to the provisions of the Federal Trade CommissionAct and the Flammable Fabrics Act , as amended , and by virtueof the authority vested in it by said Acts , the Federal Trade Com-mission , having reason to believe that Mrs. Mary Black , an indi-vidual trading as Akron Artificial Flowers and Supplies , herein-after referred to as respondent, has violated the provisions of

said Acts and Rules and Regulations promulgated under theFlammable Fabrics Act, as amended, and it appearing to theCommission that a proceeding by it in respect thereof would be inthe public interest , hereby issues its complaint stating its chargesin that respect as follows:

PARAGRAPH 1. Respondent Mrs. Mary Black is an individualtrading as Akron Artificial Flowers and Supplies. She is engagedin the sale of various consumer goods , including, but not limited

, wood fiber chips. The business address of the respondent is1213 Kohler Street , Akron , Ohio.

PAR. 2. Respondent is now and some time last past has beenengaged in the sale and offering for sale , in commerce , and in theimportation into the United States , and has introduced , deliveredfor introduction , transported and caused to be transported incommerce, and has sold or delivered after sale or shipment incommerce , fabrics , as the terms "commerce" and "fabric" are de-fined in the Flammable Fabrics Act , as amended , which fabricsfailed to conform to an applicable standard or regulation contin-ued in effect, issued or amended under the provisions of theFlammable Fabrics Act, as amended.


Complaint 76 F.

Among such fabrics mentioned hereinabove were wood fiberchips.

PAR. 3. The aforesaid acts and practices of respondent were

and are in violation of the Flammable Fabrics Act , as amendedand the Rules and Regulations promulgated thereunder, and con-stituted , and now constitute , unfair methods of competition andunfair and deceptive acts and practices in commerce within theintent and meaning of the Federal Trade Commission Act.

DECISION AND ORDER

The Federal Trade Commission having initiated an investiga-tion of certain acts and practices of the respondent named in thecaption hereof , and the respondent having been furnished there-after with a copy of a draft of complaint which the Bureau ofTextiles and Furs proposed to present to the Commission for itsconsideration and which, if issued by the Commission, wouldcharge respondents with violation of the Federal Trade Commis-sion Act and the Flammable Fabrics Act, as amended; and

The respondent and counsel for the Commission having there-after executed an agreement containing a consent order, an ad-

mission by the respondent of all the jurisdictional facts set forthin the aforesaid draft of complaint , a statement that the signingof said agreement is for settlement purposes only and does notconstitute an admission by respondent that the law has been vio-

lated as alleged in such complaint , and waivers and other provi-sions as required by the Commission s Rules; and

The Commission having thereafter considered the matter andhaving determined that it had reason to believe that the respond-ent had violated the said Acts , and that complaint should issue

stating its charges in that respect , and having thereupon acceptedthe executed consent agreement and placed such agreement on thepublic record for a period of thirty (30) days , now in furtherconformity with the procedure prescribed in 34 (b) of itsRules , the Commission hereby issues its complaint , makes the fol-lowing jurisdictional findings , and enters the following order:

1. Respondent is an individual trading as Akron ArtificialFlowers and Supplies. She is engaged in the sale of various con-sumer goods and her address is 1213 Kohler Street , Akron , Ohio.

2. The Federal Trade Commission has jurisdiction of the sub-ject matter of this proceeding and of the respondent , and the pro-ceeding is in the public interest.

AKRON ARTIFICIAL FLOWERS AND SUPPLIES 463


ORDER

It is ordered That the respondent, Mrs. Mary Blackindividual1y and trading as Akron Artificial Flowers and Sup-plies , or under any other name , and respondent's representativesagents and employees , directly or through any corporate or otherdevice , do forthwith cease and desist from sellng, offering forsale , in commerce , or importing into the United States , or intro-ducing, delivering for introduction , transporting or causing to betransported in commerce , or sellng or delivering after sale or

shipment in commerce , any fabric as "commerce" and Hfabricare defined in the Flammable Fabrics Act, as amended, whichfails to conform to an applicable standard or regulation continuedin effect , issued or amended under the provisions of the aforesaidAct.

It is further ordered That the respondent herein shall withinten (10) days after service upon her of this order me with theCommission an interim special report in writing setting forth therespondent' s intention as to compliance with this order. This in-terim special report shall also advise the Commission fu1ly andspecifical1y concerning the identity of the fabric which gave riseto the complaint, (1) the amount of such fabric in inventory, (2)any action taken to notify customers of the fiammability of such

fabric and the results thereof and (3) any disposition of suchfabric since October 2 , 1968. Such report sha1l further inform theCommission whether respondent has in inventory any fabricproduct or related material having a plain surface and made ofsilk , rayon or cotton or combinations thereof in a weight of twoounces or less per square yard or made of cotton or rayon or com-binations thereof with a raised fiber surface. Respondent wilsubmit samples of any such fabric, product or related materialwith this report.

It is further orde,' That the respondent herein sha1l , withinsixty (60) days after service upon her of this order, me with theCommission a report in writing setting forth in detail the man-ner and form in which she has complied with this order.


Complaint 76 F.

IN THE MATTER OF

JACK EZELL , ET AL.

CONSENT ORDER , ETC. , IN REGARD TO THE ALLEGED VIOLATION OF THEFEDERAL TRADE COMMISSION ACT

Docket C-1598. Complaint, Oct. 23, 1969-Decision, Oct. 23, 1969

Consent order requiring an individual associated with a Washington, D.C.,school for detectives to cease misrepresenting employment opportunitiesexaggerating the size and quality of the school's instructional staff orits facilities or equipment , using false testimonials, failing to reveal all

terms of the school's installment contracts, deceptively inducing thesigning of such contracts, and seeking to enforce any contract obtained

through misrepresentation.

COMPLAINT

Pursuant to the provisions of the Federal Trade CommissionAct, and by virtue of the authority vested in it by said Act, theFederal Trade Commission , having reason to believe that JackEze1l also known as Jack Young and as Thomas A. Eze1le, indi-vidua1ly and as a former employee of Eastern Detective Acad-emy, Inc., hereinafter referred to as respondent, has violated theprovisions of said Act , and it appearing to the Commission that aproceeding by it in respect thereof would be in the public inter-est , hereby issues its complaint stating its charges in that respectas fo1lows:

PARAGRAPH 1. Eastern Detective Academy, Inc. , is a corpora-tion organized , existing and doing business under and by virtueof the laws of the District of Columbia, with its principal offce

and place of business located at 724 14th Street, NW., in Wash-ington , D.Respondent Jack Eze1l also known as Jack Young and as

Thomas A. Eze1le , is an individual and was formerly an employeeand director of said corporation who acted in the capacity of

manager. Prior to August 1967 , he participated in the formula-tion , direction and control of the acts and practices of the saidcorporation , including the acts and practices hereinafter setforth. His business address was the same as that of said corpora-tion , and currently is 1343 H Street, NW. , Washington , D.

where he participates in the operation of a detective school foranother company.

JACK EZELL, ET AL. 465

464 Complaint

PAR. 2. The respondent engaged in the operation of a school

offering a courSe of instruction to those seeking employment asprivate or public detectives , investigators or agents.

PAR. 3. In the course and conduct of the aforesaid business,and for the purpose of inducing enrollment in the course of in-struction , the respondent engaged in the advertising of the courseof instruction in newspapers of interstate circulation. In the fur-ther course and conduct of the business, the respondent from

offces in the District of Columbia , solicited students by means ofadvertising brochures mailed to persons located in various otherStates of the United States; and the respondent maintained , andat all times mentioned herein has maintained, a substantialcourse of trade in commerce, as H commerce" is defined in the

Federal Trade Commission Act.PAR. 4. In the course and conduct of the aforesaid business

and for the purpose of inducing enrollment in the course of in-struction , the respondent made numerous statements and repre-sentabons in advertisements inserted in newspapers and in pro-motional material, of which the following are typical andilustrative , but not a1l inclusive thereof:

TRAIXED l.'\DERCOVERPEOPLE ARE ALWAYS DEMAND

Male and Female UndercoverAgents in Demand Now

Free Job Placement Service forAdvanced Students & Graduates

Our Placement Service has placed several hundred persons in investigativework in just the past year.

MEN & WOMENEXCITI'\G BIG PAY JOBS OPEN FOR

PRIVATE DETECTIVESYOV ARE

. A PERSOX OF GOOD CHARACTER'WILLING TO TAKE TRAINING IN YOUR SPARE TIME

Thank you for your inquiry regarding our Training Program Leading toPrivate Detective , Undercover Investigator and General Law EnforcementOffcer.


Complaint 76 F.

PAR. 5. By and through the use of the above quoted statements

and representations , and others of similar import and meaningbut not expressly set out herein, separately and in connection

with the oral statements and representations of employees , therespondent represented , directly or by implication , that:

1. There is a great demand for graduates of the aforemen-tioned course as detectives , investigators , undercover agents andin other similar positions and employment in such positions isavailable upon the completion of the aforementioned course of in-struction.

2. Several hundredcourse have obtained

persons who attended the aforementioned

employment in investigative work withinone year.

3. Completion of the aforementioned course of instruction qual-ifies persons to be detectives , investigators , undercover agents , orfor employment in other similar positions at commensurate\vages.

4. A placement service is provided which places a significantnumber of advance students or graduates of the aforementionedcourse in positions for which they have been trained through thecourse.


1. There was no significant demand for graduates of the afore-mentioned course, whose training \vas limited to completion ofthe course of instruction , as detectives , investigators , undercoveragents or in other simiJar positions and employment in such posi-tions was not ordinarily available upon completion of the afore-

mentioned comse of instruction to persons with limited practicalexpenence.

2. In no year did several hundrecl persons who attended the

aforementioned course obtain employment in investigative workor in other positions for which they were trained through theaforementioned course. The schoo! neither enrolled nor graduatedseveral hundred students during anyone year.

3. Completion of the aforementioned course of instruction didnot qualify persons to be detectives , investigators, undercover

agents or for en1ployment in other similar positions at commen-surate wages. Employment in the aforementioned positions isconditioned upon the aptitude and practical experience of the in-dividual rather than the training afforded by the aforementionedcourse of instruction and a substantial number of graduates from


464 Complaint

the course were unable to obtain positions which paid wages com-mensurate with those paid individuals in the aforementioned po-sitions.

4. A placement service was not provided which placed a signif-icant number of advance students or graduates of theaforementioned course in positions for which they had beentrained through the course.

Therefore , the statements and representations as set forth inParagraphs Four and Five hereof , and others of similar importand meaning but not expressly set out herein , \vere and are falsemisleading and deceptive.

PAR. 7. In the further course and conduct of the business, as

aforesaid, and for the purpose of inducing the sale of the course

of instruction , the respondent has made numerous statements andrepresentations hy means of brochures and promotional materialsand by oral statements in which the respondent represented , di-

rectly or by implication , that:1. The school maintains a staff of seventeen instructors quali-

fied by practical experience or training in the Army SecurityAgency, District of Columbia Courts , U.S. Supreme Court, U.Air Force , Offce of Special Investigations, U.S. Army Counter-Intelligence School , U. S. Signal Corps Radio CommunicationsConstabulary of Great Britain, Ilinois State Security ForcesMaryland State Internal Security Police , Armed Forces Instituteof Pathology, Washington , D.C. Metropolitan Police-Detective Di-vision, Department of the Provost Marshal General, UnitedStates Army-Criminal Investigation Division , Federal Bureau ofInvestigation , and Detective Bureau-Kew York City Police.

2. Students will be trained in the firing of handguns on theschool' s shooting range and that the school has student trainingequipment such as polygraph instruments which the students wil

be trained to operate through practical exercise.3. Each of the testimonial letters , which were displayed or en-

closed with the school's brochure, from graduates of the course

and businesses which have employed graduates of the course wereunsolicited and unbiased testimonials as to the value of thecourse.


1. The school did not maintain a staff of seventeen instructorsqualified by practical experience or training as represented. Thenumber of instructors maintained by the school was significantly


Complaint 76 F.

less than seventeen and the school' s staff of instructors was notqualified by practical experience or training in alJ the areas rep-

resented by respondent. In a number of instances , instructors soqualified had terminated their employment with the school a num-ber of years prior to such representations. In other instances , theaforementioned representations were without foundation andtherefore false.

2. Students were not trained in the firing of handguns on ashooting range and the school did not have student trainingequipment such as polygraph instruments which the studentswere trained to operate through practical exercise. The school didnot operate a shooting range and the only firing done by the stu-dents during the course of instruction , was the firing of a pistolinto an enclosed metal box. The only instruction the students re-ceived on polygraph instruments was in the form of a lecture

which time a rented or borrowed polygraph machine was broughtinto the classroom but was not made available for student use.

3. In a numher of instances , the testimonial letters from grad-uates of the course and businesses which have employed gradu-ates of the course which were displayed or enclosed with theschool' s brochure , were neither unsolicited nor unbiased. In someinstances, these letters were written by the school's employeesand in other instances the writing of said letters was inducedthrough bargaining.

Therefore the statements and representations as set forth inParagraph Seven hereof , and others of similar import and mean-ing but not expressly set out herein , were and are false , mislead-ing and deceptive.

PAR. 9. In the further course and conduct of the aforesaid busi-

ness, the respondent regularly obtained potential studentssignatures on instal1ment payment contracts through failing todisclose the nature of the instruments and by falsely representingthat such instruments were non-binding enrol1ment applications01' that the classes were paid for on a pay as you go basis and theprospective students could cancel their enrolJment at any timethat they chose to do so. Thereafter , when these prospective stu-dents failed to attend the course and make payments under thecontract , the respondent sysiematicalJy brought legal actions andobtained judgments against the prospective students or assignedthe contracts to a colJection agency for the bringing of legal ac-tions and the obtaining of judgments against the prospective stu-dents.


464 Complaint

Therefore , such statements, representations and practices con-stitute acts and practices which were and are unfair, misleadingand deceptive.

PAR. 10. In the course and conduct of the aforesaid business,and at all times mentioned herein, the respondent has been en-

gaged in substantial competition , in commerce , with corporationsfirms and individuals engaged in the sale of courses of instructionto those seeking employment as private or public detectives, in-

vestigators or agents, of the same general kind and nature as

that sold by respondent.

PAR. 11. The use by the respondent of the aforesaid false , mis-leading and deceptive statements, rcpresentations and practices

has had the capacity and tendency to mislead members of thepurchasing public into the erroneous and mistaken belief thatsaid statements and representations were truc and into the pur-chase of substantial quantities of respondent's services by reasonof said erroneous and mistaken belief.

PAR. 12. The aforesaid acts and practices of the respondent , asherein alleged , were all to the prejudice and injury of the publicand of respondent's competitors and constituted unfair methods

of competition in commerce and unfair and deceptive acts andpractices in commerce in violation of Section 5 of the FederalTrade Commission Act.

DECISION AI\D ORDER

The Commission having heretofore determined to issue its com-plaint charging the respondent named in the caption hereof withviolation of the Federal Trade Commission Act , and the respond-ent having been served with notice of said determination andwith a copy of the complaint the Commission intended to issuetogether with a proposed form of order; and

The respondent and counsel for the Commission having there-after executed an agreement containing a consent order, an ad-mission by the respondent of all the jurisdictional facts set forthin the complaint to issue herein , a statement that the signing ofsaid agreement is for settement purposes only and does not con-

stitute an admission by respondent that the law has been violatedas alleg-ed in such complaint , and waivers and other provisions asrequired by the Commission s Rules; and

The Commission having considered the agreement and havingaccepted same , and the agreement containing consent order hav-

470 EDERAL TRADE COMMISSION DECISIONS


ing thereupon been placed on the public record for a period ofthirty (30) days, now in further conformity with the procedure

prescribed in 92.34 (b) of its Rules, the Commission hereby issuesits complaint in the form contemplated by said agreement, makesthe following jurisdictional findings, and enters the followingorder:

1. Respondent Jack Ezell , also known as Jack Young and asThomas A. Ezelle , is an individual and was formerly an employeeand director of Eastern Detective Academy. Inc. , who acted in thecapacity of manager. His former business address was the sameas that of said corporation , namely, 724 14th Street NW. Wash-ington , D.C. His current business address is 1343 H Street, NW.,Washington , D. , where he participates in the operation of a de-tective school for another company.

2. The Federal Trade Commission has jurisdiction of the sub-ject matter of this proceeding and of the respondent, and the pro-ceeding is in the public interest.

ORDER

It is ordered That respondent Jack Ezell also known as JackY Dung and as Thomas A. Ezel1e , individual1y and as a former em-ployee of Eastern Detective Academy, Inc. , and respondent'agents, representatives and employees , directly or through anycorporate or other device , in connection with the advertising, of-fering for sale , sale or distribution of any course of instruction orany other service or product , in commerce as "commerce" is de-fined in the Federal Trade Commission Act, do forthwith ceaseand desist from:

1. Representing, directly or by implication , that there is agreat demand for individuals who have completed any courseof instruction as detectives , investigators , undercover agentsor in other similar positions , or that the employment in suchpositions is available upon completion of any course of in-struction unless such are the facts; or misrepresenting, in

any manner , the demand or opportunities for employment ofindividuals who complete any course of instruction.

2. Representing, directly or by implication, that several

hundred persons who attended any course obtained employ-ment in investigative work or in any other position withinone year; or otherwise misrepresenting the numb.r of per-



sons attending any course who have obtained employmentthrough the training afforded , or the nature of such employ-ment.

3. Representing, directly or by implication, that persons

who complete any course of instruction are thereby qualifiedfor employment as detectives, investigators, undercoveragents or in any other similar position unless such are thefacts; or otherwise misrepresenting the positions for which

the graduates of any course wil qualify.4. Representing, directly or by implication, that persons

who complete any course of instruction wil thereby be quali-fied for employment at wages commensurate with those paiddetectives , investigators or undercover agents unless such arethe facts; or otherwise misrepresenting the wages or com-pensation available to graduates of any course of instruction.


ent provides a placement service which places a significantnumber of graduates or students in positions for which theyhave been trained by respondent unless such are the facts; ormisrepresenting, in any manner, capabilities or facilities forassisting graduates or students of any course in fmding em-ployment, or the assistance actua11y afforded graduates in ob-taining employment.


ent maintains a staff of seventeen instructors, or that the

staff of instructors maintained by respondent has certain ex-perience, training or quabfications which they do not have;or misrepresenting, in any manner, the number of instruc-tors maintained or their experience, training or qualifica-tions.


ent operates a shooting range or has polygraph instrumentsunless such are the facts; or misrepresenting, in any mannerthe facilities or equipment which respondent has and makesavailable for the training of students.

8. Misrepresenting that students wil receive training

the firing of handguns on a shooting range or that studentswil receive practical training in the use of polygraph instru-ments; or misrepresenting, in any manner , the nature or ex-tent of training students wi11 receive.



9. Misrepresenting that graduates of any course, or busi-

nesses which have employed graduates of any course, havewritten unsolicited or unbiased testimonials.

10. Failing to reveal , disclose or otherwise inform prospec-tive customers , in a manner that is clearly understood bythem , of the non-cancellable nature and of all terms and con-ditions of any installment contract or other instrument of in-debtedness to be signed by any customer.

11. Inducing or causing customers or prospective custom-

ers to execute installment contracts or any other instrumentsof indebtedness by falsely representing that such contractsor other instruments are non-binding enrollment agreementsor that such contracts or other instruments are cancellable at

the discretion of the prospective customers; or otherwise in-ducing or causing customers or prospective customers to exe-cute installment contracts or any other instruments by mis-representing the true nature or effect of such documents.

12. Seeking to enforce or obtain a judgment on anycontract or other instrument executed after the final date ofthis order between respondent and any party, or the trans-fcrring of any such contract or other instrument to a thirdparty for the purposc of enforcing or obtaining a judgmenton said contract or instrument , wherc the respondent or hisemployees orally misrepresented the nature of the terms of

said contract or instrument at the time prior to the time thecontract or instrument was signed.

13. Failing to deliver a copy of this order to cease and de-

sist to all present and future salesmen or other persons en-gaged in the sale of respondent's courses or services, and

failing to secure from each such salesman or other person asigned statement acknowledging receipt of said order.

It V; further ordered That the respondent herein shal1 , withinsixty (60) days after service upon him of this order , file with theCommission a report in writing setting forth in detail the man-ner and form in which he has complied with this order.

MARVEL QUILTING CO. , INC., ET AL. 473

473 Complaint

IN THE MATTER OF

MARVEL QUILTING COMPANY, INC. , ET AL.

CONSENT ORDER , ETC. , IN REGARD TO THE ALLEGED VIOLATION

OF THE FEDERAL TRADE COMMISSION AND THE TEXTILE FIBERPRODUCTS IDENTIFICATION ACTS

Docket C-1599. Complaint, Oct. 30, 1969-Decision , Oct. 30, 1969

Consent order requiring a Brooklyn, N. , manufacturer of quilting and

other textile articles to cease misbranding and falsely invoicing and ad-vertising its textile fiber products.

COMPLAINT

Pursuant to the provisions of the Federal Trade CommissionAct and the Textile Fiber Products Identification Act and by vir.tue of the authority vested in it by said Acts , the Federal TradeCommission , having reason to believe that Marvel Quiling Com-pany, Inc. , a corporation, and Jack Goldfarb and Martin O1tsik

individually and as offcers of said corporation , and as copartnerstrading as Marvel Quilting Company, hereinafter referred to asrespondents , have violated the provisions of said Acts and theRules and Regulations promulgated under the Textile Fiber Prod-ucts Identification Act, and it appearing to the Commission that aproceeding by it in respect thereof would be in the public inter-est , hereby issues its complaint stating its charges in that respectas follows:

PARAGRAPH 1. Respondent Marvel Quilting Company, Inc. , is acorporation organized , existing and doing business under and byvirtue of the laws of the State of New York with its offce andprincipal place of business located at 3621 Thirteenth A venue

Brooklyn , New York. Said corporation also maintains a place ofbusiness located at 1001 Industrial Park, Piedmont, Alabama.

Individual respondents Jack Goldfarb and Martin Oltsik are of-ficers of said corporate respondent. They are also copartners

trading as Marvel Quiling Company. They formulate , direct andcontrol the acts , practices and policies of said corporation and ofsaid partnership. Their address and the address of the partner-ship and the principal place of business of each is the same asthat of said corporation

Respondents are manufacturers of textile fiber products.


Complaint 76 F.

PAR. 2. Respondents are now , and for some time last past havebeen , engaged in the introduction , delivery for introduction , man-ufacture for introduction , sale , advertising, and offering for salein commerce, and in the transportation or causing to be trans-ported in commerce , and in the importation into the united Statesof textile fiber products; and have sold, offered for sale, adver-

tised , delivered , transported and caused to be transported , textilefiber products , which have been advertised 01' offered for sale incommerce; and have sold , offered for sale , advertised , deli. eredtransported and caused to be transported , after shipment in com-merce , textile fiber products, either in their original state or con-tained in other textile fiber products , as the terms ('commerceand " textile fiber product" are defined in the Textile Fiber Prod-ucts Identification Act.

PAR. 3. Certain of said textile fiber products were misbrandedby respondents within the intent and meaning of Section 4 (a) ofthc Textile Fiber Products Identification Act and the Rules andRegulations promulgated thereunder in that they were falsely anddeceptively stamped, tagged , labcled , invoiced, advertised, orotherwise identified as to the name or amount of the constituentfibers contained therein.

Among such misbranded textie fiber products , but not limitedthereto, were textile fiber products , namely quilted materialswith labels on or affxed thereto which set forth the fiber contentas "50% acrylic , 50% undetermined fabric " whereas , in truthand in fact , said products contained different fibers and amountsof fibers than represented.

PAR. 4. Certain of the textie fiber products were misbrandedby respondents in that they were not stamped , tagged , labeled , orotherwise identified to show each element of information requiredto be disclosed by Section 4 (b) of the Textile Fiber Products

Identification Act , and in the manner and form prescribed by theRules and Regulations promulgated under said Act.

Among such misbranded textile fiber products , but not limitedthereto , were quilted materials with labels which failed:

(1) To disclose the true percentage of the fibers present byweight; and

(2) To disclose the true generic names of the fibers present.PAR 5. The acts and practices of respondents, as set forth

above were , and are , in violation of the Textile Fiber ProductsIdentification Act and the Rules and Regulations promulgated

MARVEL QUILTING CO. , INC., ET AL. 475

473 Complaint

thereunder , and constituted , and now constitute, unfair methods

of competition and unfair and deceptive acts or practices , in com-merce , under the Federal Trade Commission Act.

DECISION AND ORDER

The Federal Trade Commission having initiated an investiga-tion of certain acts and practices of the respondents named in thecaption hereof , and the respondents having been furnished there-after with a copy of a draft of complaint which the Bureau ofTextiles and Furs proposed to present to the Commission for itsconsideration and which, if issued by the Commission, wouldcharge respondents with violation of the Federal Trade Commis-sion Act and the Textile Fiber Products Identification Act; and

The respondents and counsel for the Commission having there-after executed an agreement containing a consent order, an ad-

mission by the respondents of all the jurisdictional facts set forthin the aforesaid draft of complaint, a statement that the signingof said agreement is for settlement purposes only and does notconstitute an admission by respondents that the law has been vio-lated as alleged in such complaint , and waivers and other provi-sions as required by the Commission s Rules; and

The Commission having thereafter considered the matter andhaving determined that it had reason to believe that the respond-ents have violated the said Acts , and that complaint should issue

stating its charges in that respect, and having thereupon acceptedthe executed consent agreement and placed such agreement on thepublic record for a period of thirty (30) days , now in furtherconformity with the procedure prescribed in 34 (b) of its

Rules , the Commission hereby issues its complaint, makes the fol-lowing jurisdictional findings , and enters the fol1owing order:

J. Proposed respondent Marvel Quiling Company, Inc., is acorporation organized , existing and doing business under and byvirtue of the laws of the State of New York, with its offce and

principal place of business located at 3621 Thirteenth AvenueBrooklyn , New York. Said corporation also maintains a place ofbusiness which is located at 1001 Industrial Park , Piedmont , Ala-bama.

Proposed respondents Jack Goldfarb and Martin 01tsik are of-ficers of proposed corporate respondent. They are also copartnerstrading as :VIarvel Quilting Company. They formulate , dircct and



control the acts , practices and policies of said corporation and ofsaid partnership. Their address and the address of the partner-ship is the same as that of said corporation.


ORDER

It is ordered That respondents Marvel Quilting Company, Inc.,a corporation , and its offcers , and Jack Goldfarb and Martin Olt-sik , individually and as offcers of said corporation , and as copart-ners , trading as Marvel Quilting Company, and respondents ' rep-resentatives, agents and employees, directly or through anycorporate or other device , in connection with the introduction , de-livery for introduction , manufacture for introduction , sale , adver-tising, or offering for sale , in commerce , or the transportation orcausing to be transported in commerce , or the importation into theUnited States , of any textie fiber product; or in connection withthe sale , offering for sale , advertising, delivery, transportation , orcausing to be transported , of any textile fiber product, which hasbeen advertised or offered for sale in commerce; or in connectionwith the sale , offering for sale , advertising, delivery, transporta-tion , or causing to be transported , after shipment in commerce , ofany textile fiber product, whether in its original state or con-tained in other textile fiber products , as the terms "commerceand "textile fiber product" are defined in the Textile Fiber Prod-ucts Identification Act, do forthwith cease and desist from mis-branding textile fiber products by:

1. Falsely or deceptively stamping, tagging, labeling, in-voicing, advertising or otherwise identifying any textile fiberproduct as to the name or amount of constituent fiberscontained therein.

2. Failing to affx labels to each such product showing in aclear , legible and conspicuous manner each element of infor-mation required to be disclosed by Section 4(b) of the Tex-tile Fiber Products Identification Act.

It is further ordered. That the respondent corporation shaJlforthwith distribute a copy of this order to each of its operatingdivisions.

MARVEL QUILTING CO. , INC.,- ET AL. 477


It is further ordered That the respondents herein shall , withinsixty (60) days after service upon them of this order , file withthe Commission a report, in writing, setting forth in detail themanner and form in which they have complied with this order.

IN THE MATTER OF

MONMOUTH MERCHANDISING CO. INC. ET AL.

CONSENT ORDER, ETC., IN REGARD TO THE ALLEGED VIOLATIONOF THE FEDERAL TRADE COMMISSION AND THE WOOL PRODUCTS

LABELING ACTS

Docket C-1600. Complaint, Oct. 30, 1969-Decision, Oct. 30 , 1969

Consent order requiring a Freehold , N. manufacturer of saddle and utiJityblankets to cease misbranding and falsely invoicing its wool products.

COMPLAINT

Pursuant to the provisions of the Federal Trade CommissionAct and the Wool Products Labeling Act of 1939, and by virtueof the authority vested in it by said Acts , the Federal Trade Com-mission . having reason to believe that Monmouth MerchandisingCo. Inc. , a corporation , and Nathan Koenig, William Kaplan andIrving Kaplan, individually and as offcers of said corporation

hereinafter referred to as respondents , have violated the provi-sions of said Acts and the Rules and Regulations promulgatedunder the Wool Products Labeling Act of 1939 , and it appearingto the Commission that a proceeding by it in respect thereof

would be in the public interest, hereby issues its complaint stat-ing its charges in that respect as follows:

PARAGRAPH 1. Respondent Monmouth Merchandising Co. , Inc.is a corporation organized , existing and doing business under andby virtue of the laws of the State of New Jersey with its offceand principal place of business located at 231 ThrockmortonStreet, Freehold , New Jersey.Respondents Nathan Koenig, William Kaplan and Irving Ka-

plan are offcers of said corporation. They formulate , direct andcontrol the policies, acts and practices of said corporation, and

their address is the same as that of the corporate respondent.Respondents are engaged in business as manufacturers of sad.

practices hereinafter set forth. their address is the same ......tomers may place their toothbrush...

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